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JGBs gain on Middle East tensions, cautious BOJ stance

BY Reuters | ECONOMIC | 06/18/25 12:32 AM EDT

TOKYO, June 18 (Reuters) - Japanese government bonds gained on Wednesday, tracking a rally for U.S. Treasuries overnight, as escalating tensions in the Middle East boosted demand for safe-haven assets.

The 10-year JGB yield was down 2 basis points (bps) at 1.455%, as of 0413 GMT, tracking a more than 6 bps drop in equivalent U.S. Treasuries overnight. Yields fall when bond prices rise.

JGBs were also buoyed by Bank of Japan Governor Kazuo Ueda's cautious tone on further policy tightening in a press conference on Tuesday, after the monetary authority left interest rates steady, as widely expected.

Ueda's "dovish" press conference "confirms the central bank's caution about raising rates in the near future given considerable uncertainty about tariff policy," said Takayasu Kudo, Japan Economist at BofA Securities, who doesn't expect another rate hike until April of next year.

The two-year JGB yield fell 2.5 bps to 0.735%, while the five-year yield sank 3 bps to 1.00%.

The 20-year JGB yield declined 2 bps to 2.38%. The 30-year JGB lost 1 bp to 2.925%.

Benchmark 10-year JGB futures rose 0.23 yen to 138.90 yen. (Reporting by Kevin Buckland; Editing by Sherry Jacob-Phillips)

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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.

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