Japan bond yields rise as safe-haven demand eases after tech rebound
Japanese government bond yields rebounded as recovering technology stocks reduced safe-haven demand following last week's sharp selloff. Strong US jobs data and expectations of further Bank of Japan tightening also influenced investor sentiment ac...
By Anupam Nagar, ETMarkets.com |
ETMarkets.com
Japan's bond market faces competing pressures as AI volatility eases and expectations of tighter monetary policy strengthen.
Japanese government bond (JGB) yields rose on Monday, trimming some of last week's sharp decline as demand for safe-haven assets eased following a recovery in technology stocks.
The benchmark 10-year JGB yield climbed 6.5 basis points to 2.7%, recovering part of its losses from Friday, when investors sought refuge in government bonds amid a deepening selloff in artificial intelligence-related shares. Bond yields move inversely to prices.
Japan's benchmark Nikkei 225 index rebounded on Monday after plunging 6% in the previous session, easing some demand for traditional safe-haven assets.
Read more: Global Market Today: Asian stocks open mostly higher, Nvidia probe looms
US Treasuries also fell in the latest session, pushing yields higher after stronger-than-expected payroll data boosted expectations that the Federal Reserve could raise interest rates at its December meeting.
JGB yields are recovering amid continued uncertainty over the outlook for AI-related investments and broader financial market volatility. However, the speed of last week's yield decline has also raised the possibility of a near-term correction.
The five-year JGB yield advanced 5.5 basis points to 2.1%, while the two-year yield, which is particularly sensitive to expectations for Bank of Japan monetary policy, remained unchanged at 1.725%.
Read more: Wall Street grapples with $5.7 trillion rout as AI bets unwind
Meanwhile, expectations of further monetary tightening by the Bank of Japan have strengthened. The central bank has kept its policy rate at 1.25% since raising it in September, but has adopted a more hawkish stance, with markets increasingly pricing in a potential rate hike to 1.5% in December.
BOJ Governor Kazuo Ueda said on Friday that underlying inflation was expected to remain around the central bank's 2% target, while acknowledging some upside risks.
Investors are now assessing the competing influences of global technology-sector volatility, changing expectations for US monetary policy and the BOJ's tightening trajectory on Japanese bond markets, Reuters reported.
(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times.)
The benchmark 10-year JGB yield climbed 6.5 basis points to 2.7%, recovering part of its losses from Friday, when investors sought refuge in government bonds amid a deepening selloff in artificial intelligence-related shares. Bond yields move inversely to prices.
Japan's benchmark Nikkei 225 index rebounded on Monday after plunging 6% in the previous session, easing some demand for traditional safe-haven assets.
Read more: Global Market Today: Asian stocks open mostly higher, Nvidia probe looms
US Treasuries also fell in the latest session, pushing yields higher after stronger-than-expected payroll data boosted expectations that the Federal Reserve could raise interest rates at its December meeting.
JGB yields are recovering amid continued uncertainty over the outlook for AI-related investments and broader financial market volatility. However, the speed of last week's yield decline has also raised the possibility of a near-term correction.
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The five-year JGB yield advanced 5.5 basis points to 2.1%, while the two-year yield, which is particularly sensitive to expectations for Bank of Japan monetary policy, remained unchanged at 1.725%.
Read more: Wall Street grapples with $5.7 trillion rout as AI bets unwind
Meanwhile, expectations of further monetary tightening by the Bank of Japan have strengthened. The central bank has kept its policy rate at 1.25% since raising it in September, but has adopted a more hawkish stance, with markets increasingly pricing in a potential rate hike to 1.5% in December.
BOJ Governor Kazuo Ueda said on Friday that underlying inflation was expected to remain around the central bank's 2% target, while acknowledging some upside risks.
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Investors are now assessing the competing influences of global technology-sector volatility, changing expectations for US monetary policy and the BOJ's tightening trajectory on Japanese bond markets, Reuters reported.
(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times.)
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