Global Market: Japanese government bond yields hit one-month lows as investors seek safety

Japanese government bond (JGB) yields fell to more-than-one-month lows on Thursday as investors sought safe-haven assets following a Wall Street selloff triggered by hotter-than-expected US inflation data and renewed concerns over interest rates.

Japanese yields fell as losses in global equities spread to Asian markets, with technology stocks under pressure amid renewed concerns about the artificial intelligence sector and the potential for tighter monetary policy in the United States.

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According to Reuters, the benchmark 10-year JGB yield fell 6.5 basis points to 2.93%, its lowest level since September 10. Bond yields move inversely to prices.

The 30-year JGB yield dropped 4.5 basis points to 3.995%, slipping below the psychologically significant 4% threshold for the first time since September 10.

Yields also declined across other maturities. The two-year JGB yield fell 1.5 basis points to 1.905%, while the five-year yield dropped 4.5 basis points to 2.325%, its lowest since September 18. The 20-year yield slid 6.5 basis points to 3.80%, also marking its lowest level since September 18.

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The move followed the release of US consumer price inflation data that exceeded economists' expectations, prompting concerns that the Federal Reserve could raise interest rates more aggressively.

US Treasury yields initially rose in response to the inflation figures as investors reassessed the outlook for monetary policy, but subsequently reversed course sharply. The benchmark 10-year US Treasury yield fell nearly 9 basis points to 5.1% on Thursday.

Technology stocks were among the biggest losers in the global equity selloff as concerns about the sustainability of AI-related investments resurfaced. US cloud-computing provider CoreWeave plunged more than 15% on Wednesday after media reports indicated that its bonds had fallen to levels associated with distressed debt.

In a memo to employees, CoreWeave's chief executive said the company's substantial deal backlog was sufficient to support its debt obligations.

Meanwhile, investors largely shrugged off remarks by Bank of Japan board member Junko Koeda, who said the central bank should avoid becoming overly cautious about raising interest rates given the considerable upside risks to inflation.

Her comments underscored the policy challenge facing the Bank of Japan as it balances persistent inflation risks against global financial market volatility.

The decline in JGB yields on Thursday suggested that demand for safer assets had strengthened amid uncertainty over the US interest-rate outlook and concerns about further losses in risk-sensitive markets.

(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times.)