Japanese Yields Slip on Strong 40Y Auction
Japan’s 10-year government bond yield fell about 5 basis points to 2.24% on Thursday, as a strong auction of 40-year government bonds eased concerns about the country’s fiscal outlook. The sale of super-long bonds this week attracted the highest demand since March last year, stabilizing sentiment after Prime Minister Sanae Takaichi’s proposal to remove the sales tax on food for two years triggered a historic bond selloff earlier this month. Investors also considered political uncertainty ahead of the Feb. 8 lower house snap election, with early polls suggesting Takaichi’s ruling Liberal Democratic Party could increase its seat count and potentially secure a majority. The prime minister called the snap election to consolidate power and advance expansionary fiscal policies. Meanwhile, minutes from the Bank of Japan’s December policy meeting indicated that board members favored continuing rate hikes if economic and price trends align with forecasts.
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