Japan bonds slide, 30-year yield hits record high before 10-yr auction
Japanese government bonds fell, sending the 30-year yield to a record high of 4.24% ahead of a 2.6 trillion yen 10-year auction. Worries over expansionary fiscal policies and French debt selloffs weighed on sentiment.
TOKYO, Oct 6 (Reuters) — Japanese government bonds (JGBs) fell on Tuesday, sending the 30-year yield to a record high, with investor sentiment weak ahead of an auction of 10-year notes amid worries about Prime Minister Sanae Takaichi's expansionary fiscal policies and contagion from a French debt selloff. 24%. 5 billion) of the notes on Tuesday. Takaichi on Monday pledged to "control" bond issuance and act swiftly against market turbulence, seeking to reassure investors worried about Japan's worsening public finances.
Meanwhile, French borrowing costs have surged with investors dumping the country's debt amid worries about the government's plan to enact an unpopular 2027 budget to lower its deficit and contain its record-high debt load. Prospective buyers at the 10-year JGB auction may be "somewhat wary of Takaichi continuing to be seen as fiscally aggressive, with JGBs facing additional selling pressure as a result," said Mizuho market analyst Yuhi Kawano. "Upward pressure on global interest rates could of course be negative for JGBs, but it is also possible that they could see some 'flight to quality' demand alongside German bunds and US Treasuries.
That said, JGBs might not necessarily be viewed as a 'safe haven' in the current climate given that so much attention seemingly continues to focus on Japan's fiscal position," Kawano said. 98%, a three-decade high. com;)