JGBs Rise as Fed Cut Fuels Treasury Gains
Sign up for Global Macro Playbook: Stay ahead of the curve on global macro trends.
Japanese government bonds (JGBs) rose in early Tokyo trading, mirroring overnight gains in US Treasurys following the Federal Reserve's widely anticipated 25 basis point rate cut, reports The Wall Street Journal.
The close correlation between JGBs and Treasurys is driving the upward trend in the Japanese bond market.
Looking ahead, economists at SMBC Nikko Securities anticipate that the Bank of Japan (BOJ) will prioritize "careful, clear messaging" in its November and December communications if the central bank plans to raise rates in late 2024 or early 2025. This strategy aims to bridge any potential gaps with market expectations if the BOJ intends to hike rates again.
The 5-year JGB yield is currently down 1.5 basis points at 0.625%, while the 10-year yield has declined by 2 basis points to 0.985%.