Japan's super-long bond yields fall sharply after heavy sell-off

Yields on super-long Japanese government bonds (JGBs) fell sharply in early trade on Tuesday as investors snapped up bargains following recent steep sell-offs.

The 30-year JGB yield fell 10 basis points (bps) to 2.935%, its lowest since May 14. The 40-year JGB yield lost 10.5 bps to 3.43%.

"Those bonds looked cheap for investors after their yields rose steeply, which boosted appetite for bonds," said Naoya Hasegawa, chief bond strategist at Okasan Securities.


The 20-year JGB yield shed 7 bps to 2.435%.

Long-dated debt has been sold off around the world in recent weeks, and in Japan, concerns have been exacerbated by a drop in bond buying by the central bank and political jockeying over stimulus.

"Also, there is an expectation among market players that the Ministry of Finance might reduce the sale of those bonds," Hasegawa said.

But the decline in sales of those bonds could boost the issuance of shorter-dated bonds, which likely capped the decline in 10-year JGBs on Tuesday, Hasegawa added.

The 10-year JGB yield fell 2 bps to 1.485%.

The five-year yield was flat at 1.01%.