Japan's 30-year bond auction provides early test of 'Takaichi trade'

The yield on Japan's 30-year government bond rose to an all-time high on Tuesday, extending its climb from the previous session after the ruling party chose fiscal dove Sanae Takaichi as its leader, setting her up to become the country's next premier.

Ten-year JGB yields also marked fresh 17-year peaks, with the bond market under additional pressure following an advance for Treasury yields overnight as the U.S. government shutdown dragged on. Bond yields rise when prices fall.

Investors were also cautious with the Japanese finance ministry auctioning about 700 billion yen of 30-year JGBs later in the day.


Weak demand at long-term debt auctions earlier this year spooked the market, causing a spike in yields and prompting the ministry to curtail issuance of 20-, 30-, and 40-year securities.

The 30-year yield rose 2.5 basis points (bps) to an unprecedented 3.31%.

The 10-year yield advanced 2 bps to 1.69%, the highest since July 2008.

Other tenors had not yet traded, as of 0037 GMT.

Benchmark 10-year JGB futures sank 0.15 yen to 135.75 yen.