JGB yields rise as risk appetite grows on easing US-China trade tension

Japanese government bond (JGB) yields rose on Monday as signs of easing trade tensions between China and the U.S. buoyed risk appetite, prompting a sale of safe-haven debt.

The 10-year JGB yield rose 1 basis point (bp) to 1.665%. The 20-year JGB yield rose 1.5 bps to 2.61%.

Top Chinese and U.S. economic officials on Sunday hashed out the framework of a trade deal for U.S. President Donald Trump and Chinese President Xi Jinping to decide on later this week in their eagerly anticipated meeting in South Korea.


"The market is cautious about the outcome of the Bank of Japan's policy meeting this week, and also awaiting the talks about Japan's defence spending between Prime Minister Sanae Takachi and Trump," said Naoya Hasegawa, chief senior bond strategist at Okasan Securities.

"But those cautions did not become market-moving cues today" as risk-on sentiment prevailed on Monday's JGB trade.

The BOJ is likely to debate this week whether conditions are ripe to resume rate hikes as worries about a tariff-induced recession ease, though political complications may keep it on hold for now.

Trump departed for Tokyo on Monday, where he was scheduled to meet Japan's emperor as well as newly elected Prime Minister Takaichi, part of an Asia trip aimed at securing trade deals, investment and increased defence spending.

The 30-year JGB yield rose 2 bps to 3.075%.

Shorter-dated JGB yields also rose, with the two-year JGB yield rising 1 bp to 0.94%. The five-year JGB yield was up 1 bp to 1.23%.

U.S. Treasury yields also rose in Asian trade, climbing as much as 4 bps to 4.037% on 10-year notes.