Japan's 10-year bond yield falls to one-month low mirroring US yield declines

Japan's 10-year government bond (JGB) yield touched a one-month low on Friday, tracking U.S. Treasury yields, which fell overnight on concerns over trade tensions between the U.S. and China and credit market worries.

The 10-year JGB yield fell as much as 4 basis points (bps) to 1.615%, its lowest level since September 19, and was last down 3 bps at 1.62%.

Firm outcome of the liquidity enhancement auction for the bonds with maturities of between over five- and 15.5 years also supported sentiment, said Katsutoshi Inadome, a senior strategist at Sumitomo Mitsui Trust Asset Management.


"The yields on super-long dated bonds may trade lower next week as uncertainties over Japan's politics and finances have eased," Inadome said.

The 20-year JGB yield fell 2.5 bps to 2.625% and the 30-year JGB yield fell 1.5 bps to 3.105%.

Prospects of Liberal Democratic Party (LDP) leader Sanae Takaichi becoming the next prime minister increased after the party has approached the opposition Japan Innovation Party, known as Ishin, in a bid to secure a majority vote and expand its coalition.

Yields on shorter-dated bonds also fell, with the two-year JGB yield slipping 2 bps to 0.895%. The five-year yield fell 3 bps to 1.175%.