JGBs rise after US Treasury acts to bring down borrowing rates

Japanese government bonds (JGBs) surged on Thursday following a move by the US Treasury to curb a rise in long-term borrowing rates, stabilizing global debt markets. The benchmark 10-year JGB yield fell 5.5 basis points to 2.835%, while the 20-year yield dropped 8.5 bps to 3.690%. Yields move inversely to bond prices. The Ministry of Finance sold approximately 2.5 trillion yen ($15.78 billion) worth of 20-year bonds on Thursday, with a bid-to-cover ratio of 3.98, indicating moderate demand.

Takayuki Miyajima, a senior economist at Sony Financial Group, noted that the US Treasury's actions temporarily halted the global trend of rising long-term interest rates. Speculation grew that Japan may also take measures to address supply-and-demand issues in the bond market. Long-term borrowing costs in the US, Germany, and Japan reached their highest levels in decades, reflecting concerns about mounting government debt and inflation due to persistent high oil prices amid the Middle East conflict.

The 40-year JGB yield decreased 9.5 bps to 4.055%, while the 30-year yield eased 8.5 bps to 3.995%. The two-year yield remained unchanged, and the five-year yield dropped 3 bps to 2.090%, following a record high earlier in the week.