10-year JGB yield briefly reaches 2.935% as global bond selloff intensifies

  • Japanese bonds fell as higher US Treasury yields pressured the benchmark 10-year JGB.
  • 2.935% was the recent high for the newly issued 10-year JGB yield.
  • Treasury buybacks expanded, but planned purchases fell short of investor expectations.

The newly issued 10-year Japanese government bond yield briefly climbed to 2.935%, a recent high, after US Treasury yields rose across the curve and pressured Japanese debt. The benchmark 10-year JGB yield settled at 2.910%, up 0.030 percentage points from the previous session. Investors were disappointed that the US Treasury Department's expanded buyback program was smaller than expected, while Brent crude rose above $101 per barrel, or about NT$3,200, for the first time since July. Heavy corporate bond issuance added further supply pressure, with 16 companies raising $22.75 billion on Wednesday after 18 issuers raised $38.6 billion on Tuesday. US Treasury yields rose 3.59 basis points to 4.4295% for two-year debt, 5.36 basis points to 4.6163% for five-year debt, 5.24 basis points to 4.8406% for 10-year debt and 4.34 basis points to 5.2889% for 30-year debt, with the long end under the greatest pressure. The Treasury's $39 billion 10-year auction nonetheless showed strong demand: the awarded yield was 4.834%, below the 4.849% when-issued yield, while the bid-to-cover ratio reached 2.71 times, its highest since 2016. Indirect bidders received 79.25%, compared with 4.3% for primary dealers and 16.5% for direct bidders. Rising oil prices, Middle East tensions, US inflation data and expectations for higher rates for longer are now central to the outlook, alongside the upcoming 30-year auction and the Federal Reserve's policy meeting next week.

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