Japanese bond market pauses before expected tariff salvo

SINGAPORE: Japanese government bonds took a breather on Tuesday following their sharpest jump in eight months, as investors awaited the next round of tariff announcements from the United States.

The benchmark 10-year Japanese government bond yield rose 1.6 basis points to 1.51%, after falling 10 bps over the previous two sessions, the steepest drop since August. Ten- year futures fell about 20 ticks.

Bond yields move inversely to prices. Investors have been bidding up gold, the yen and safe-haven bonds on concerns that U.S. President Donald Trump’s threats of broad tariffs on U.S. trading partners later this week will end up dampening U.S. and global growth.

Buying in the Japanese government bond market, however, has been tempered by expectations that Japan’s interest rates are heading higher as the country emerges from years of deflation.

Japan’s 10-year bond yield falls to 3-week low as BOJ rate hike bets ease

The 39.4 basis point rise in the 10-year yield over the first quarter of 2025 was the highest quarterly rise for the benchmark yield since the third quarter of 2003.

Yields across several tenors had hit 17-year highs only last week and about 30 bps of rate hikes are priced for this year – a stark contrast to other developed markets, where cuts are expected.

The five-year yield held steady at 1.1% and at the long end of the curve, the 20-year yield held at 2.23% and 30-year yield was 1.5 bps higher at 2.535%.