The yield on Japan’s 10-year note climbed 6.5 basis points, while the 30-year yield rose 10.5 basis points to 2.51%, the highest since 2008. The 40-year yield jumped to a level unseen since its inception in 2007.
The rout comes after the 10-year German bund yield soared as much as 31 basis points due to a dramatic change in the country’s spending plans for defense and infrastructure investments.
“Investors may not have expected developments to this extent in Germany, and they will need to reconstruct their views going forward,” said Masayuki Koguchi, executive chief fund manager at Mitsubishi UFJ Asset Management. “The impact of the large rise in German yields yesterday was very strong, and US government bonds were also sold, so there is a sense of caution about the 30-year bond auction today.”
Yields in Japan are also rising as investors speculate that the Bank of Japan will continue to hike rates, with Deputy Governor Shinichi Uchida signaling that the benchmark interest rate remains on a gradual upward path in his speech on Wednesday. Caution surrounding the 30-year bond auction later Thursday is also weighing on bonds.
