JGB yields edge down in sympathy with US peers

BY Reuters | TREASURY | 02:17 AM EST

By Brigid Riley

TOKYO, Nov 26 (Reuters) - Japanese government bond (JGB) yields declined on Tuesday, tracking an overnight fall in U.S. Treasury yields as investors awaited fresh market signals.

The 10-year JGB yield was last down 1 basis point (bp) at 1.06%, while 10-year JGB futures rose 0.08 points to 142.93 yen.

U.S. Treasury yields declined sharply on Monday as investors expected a more moderate than feared U.S. fiscal trajectory after hedge fund manager Scott Bessent was nominated as U.S. Treasury secretary by President-elect Donald Trump on Friday.

But after dropping in morning trade in tandem with U.S. yields, movement has been limited as the JGB market struggled between buying and selling.

JGB yields climbed in recent sessions as the market began to price in a higher chance that the Bank of Japan will increase interest rates in December. The shift was largely spurred by expectations that the yen's decline could pressure the central bank to act.

That upward trend in yields may have peaked out for the time being, said Yurie Suzuki, market analyst at Mizuho Securities.

"If there actually is a rate hike in December, it will be easier to factor in future rate increases, but I think market pricing (for a year-end hike) seems to have paused for now."

The dollar earlier rose after Trump pledged big tariffs on Canada, Mexico and China.

But the yen hadn't moved much from its range. The dollar was last 0.12% lower at 153.99 yen.

"As such, I don't think the impact on yen bond yields is that significant," said Suzuki.

The two-year JGB yield, which corresponds more closely to monetary policy expectations, was flat at 0.585%.

The 20-year JGB yield fell 1.5 bps to 1.865%, while the 30-year JGB yield ticked down 0.5 bp to 2.28%. Both sat just above two-week lows hit earlier in the day.

The five-year yield edged down 0.5 bp to 0.73%. (Reporting by Brigid Riley; Editing by Eileen Soreng)

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

fir_news_article