FX.co ★ Japanese Yields Fall After Strong 20-Year Auction

Japan’s 10-year government bond yield fell to around 2.9% on Tuesday, approaching a six-week low after a 20-year bond auction drew record demand, underscoring strong investor appetite for higher-yielding debt. Yields had climbed to multi-decade highs earlier this month amid a global bond selloff, driven by persistent energy-related inflation linked to the conflict in the Middle East. Concerns over Japan’s deteriorating fiscal outlook also pushed yields higher, as Prime Minister Sanae Takaichi pursued expansionary fiscal policies while repeatedly assuring markets that the government would avoid further aggravating the debt burden. On the monetary side, the Bank of Japan is widely expected to leave interest rates unchanged at next week’s meeting, with Governor Kazuo Ueda likely to offer more detailed guidance on the timing of the next rate increase.