Japan's 10-year bond yield reverses course to fall on portfolio rebalancing need

Japan's 10-year government bond yield reversed course to fall on Friday as investors bought the debt to rebalance their portfolios at the end of the April-June quarter following sharp gains in ‌Japanese equities.

Here ⁠are ⁠a few details:

The benchmark 10-year JGB yield fell 3 basis points (bps) to 2.595%, after rising to as high as 2.635% earlier in the session. Yields move inversely to bond prices.

"There were no particular market-moving cues to send ⁠the yield lower, ‌so this could be driven by the need for portfolio rebalancing," said Masahito ⁠Sugawara, senior strategist at Daiwa Securities.


Japan's Nikkei has jumped 35% so far in the quarter ending this month, the steepest quarterly gain on record, according to LSEG.

Data showed annual core inflation in Japan's capital accelerated in June, a sign of broadening price ‌pressures from the Middle East conflict, keeping the central bank on track to consider further raising interest ⁠rates.

The two-year yield inched down 0.5 bp to 1.405%. The five-year yield fell 1. bp to 1.865%.

The 20-year JGB yield fell 2.5 bps to 3.51%. The 30-year yield fell 2 bps to 3.805%. The yield on the 40-year JGB fell 4.5 bps to 3.67%.