Japanese Bond Yields Dip on Defense Spending Outlook

1 min read Updated on 28 Oct 2025, 12:17 PM

Reviewed by

Shraddha JoshiScanX News Team

Overview

Japanese government bond (JGB) yields declined on Tuesday, influenced by expectations around Japan's defense budget discussions with the U.S. The 10-year JGB yield fell 2 basis points to 1.65%, while the 5-year yield dropped 1 basis point to 1.22%. However, the 30-year yield rose slightly by 0.5 basis points to 3.08%. The market reacted positively to reports that the U.S. did not request Japan to increase defense spending beyond the 2% of GDP target. Prime Minister Kishida's meeting with President Biden focused on economic and security matters. The Bank of Japan continued its bond buying operations, with weak demand observed for bonds with maturities over 25 years.

*this image is generated using AI for illustrative purposes only.

Japanese government bond (JGB) yields experienced a decline on Tuesday, influenced by expectations surrounding Japan's defense budget discussions with the United States. The market movement reflects investor reactions to potential fiscal policies and their implications for the bond market.

Key Bond Yield Movements

Bond Type	Yield Change	New Yield
10-year JGB	-2 basis points	1.65%
5-year JGB	-1 basis point	1.22%
30-year JGB	+0.5 basis points	3.08%

Factors Influencing the Market

Defense Spending Expectations

Japan aims to reach its defense spending goal of 2% of GDP in the current fiscal year through March, ahead of the original 2027 target.
Market reports suggest the U.S. did not request Japan to increase spending beyond the 2% target.
This expectation improved investor sentiment, contributing to the decline in short and medium-term bond yields.

High-Level Discussions

Prime Minister Fumio Kishida met with U.S. President Joe Biden.
The meeting focused on economic and security matters, potentially impacting fiscal policies.

Long-Term Bond Concerns

Despite the overall decline in yields, super-long-dated bond yields increased slightly.
The 30-year JGB yield rose by 0.5 basis points to 3.08%.
This increase reflects ongoing concerns over increased government spending.

Bank of Japan's Role

The Bank of Japan (BOJ) remains active in the bond market:

Conducted bond buying operations across various maturities.
Weak demand was observed for bonds with maturities over 25 years.
This weak demand likely contributed to the slight increase in the 30-year yield.

The movement in Japanese government bond yields underscores the delicate balance between fiscal policies, particularly defense spending, and monetary policies. As Japan navigates its economic and security priorities, the bond market continues to react to both domestic decisions and international discussions, reflecting the interconnected nature of global finance and geopolitics.

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Japanese Government Bond Yields Climb as US-China Trade Tensions Ease

1 min read Updated on 27 Oct 2025, 02:28 PM

Reviewed by

Shraddha JoshiScanX News Team

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Overview

Japanese government bond yields have increased due to improving US-China trade relations, reducing demand for safe-haven assets. The 10-year JGB yield rose 1 basis point to 1.67%, while the 20-year JGB yield increased 1.5 basis points to 2.61%. US 10-year Treasury yields also climbed up to 4 basis points to 4.04%. Chinese and US officials are discussing a potential trade deal framework, boosting risk appetite in markets. The Bank of Japan is expected to consider rate hikes, though political factors may delay immediate action.

*this image is generated using AI for illustrative purposes only.

Japanese government bond (JGB) yields have risen as easing trade tensions between the United States and China boost risk appetite, prompting investors to sell safe-haven debt. This shift in market sentiment comes as economic officials from both nations discuss a potential trade deal framework.

Key Bond Yield Movements

Bond Type	Yield Change
10-year JGB	+1 basis point to 1.67%
20-year JGB	+1.5 basis points to 2.61%
US 10-year Treasury	Up to +4 basis points to 4.04%

US-China Trade Talks

Chinese and US economic officials are engaged in discussions to develop a trade deal framework. This framework is intended for consideration by the presidents of both countries at their upcoming meeting. The progress in these talks has contributed to the improved risk sentiment in the markets.

Bank of Japan's Monetary Policy Outlook

The Bank of Japan is expected to debate potential rate hikes. This comes as concerns about a tariff-induced recession diminish. However, political complications may delay any immediate action on interest rates.

Global Bond Market Impact

The easing of US-China trade tensions has had a ripple effect on global bond markets. US Treasury yields have also seen an increase during Asian trading, with the benchmark 10-year notes rising by up to 4 basis points to reach 4.04%.

This shift in the bond market underscores the interconnectedness of global financial markets and the significant impact that geopolitical events, particularly trade relations between major economies, can have on investor sentiment and safe-haven assets like government bonds.