FX.co ★ Japan 10-Year Yield Falls to Near 3-Week Low

Japan's 10-year government bond yield declined to approximately 1.45% on Friday, marking its lowest point in nearly three weeks. This decrease was prompted by stronger-than-expected demand at a 30-year bond auction. Earlier in the week, a successful 10-year bond auction also contributed to alleviating pressure across the wider bond market. This easing of yields follows a steep ascent in late May, during which the 10-year yield neared levels unseen since 2008, and the 30-year yield reached unprecedented heights. This surge was fueled by escalating investor concerns regarding the sustainability of Japan's fiscal position, amid the Bank of Japan's gradual retreat from the bond market. In response, reports indicate that the Ministry of Finance is contemplating reducing the issuance of super-long-term bonds to mitigate upward pressure on yields. Concurrently, BOJ Governor Kazuo Ueda suggested that the central bank will likely continue to taper its Japanese Government Bonds (JGB) purchases in the forthcoming fiscal year, reinforcing the anticipation of a gradual but consistent trajectory toward policy normalization.