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 JScanX News Team

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.

Japanese Government Bonds Rise as PM Candidates' Economic Policies Come Under Scrutiny

1 min read Updated on 24 Sept 2025, 10:47 AM

Reviewed by

Anirudha BScanX News Team

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Overview

Japanese government bonds (JGBs) gained as investors evaluated economic policies proposed by prime ministerial candidates. The 10-year JGB yield decreased by 1 basis point to 1.65%, while the five-year yield dropped 0.5 basis points to 1.22%. JGBs have faced pressures from global deficit concerns, domestic political uncertainty, and reduced Bank of Japan bond purchases. The Liberal Democratic Party will vote on October 4 for the next prime minister. Candidates Sanae Takaichi and Shinjiro Koizumi present contrasting economic views, with Takaichi advocating for more JGB issuance if needed, while Koizumi supports funding through increased tax revenues and spending cuts. The leadership race outcome could significantly impact the JGB market and economic policies.

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

Japanese government bonds (JGBs) experienced gains as market participants closely evaluated the economic policies proposed by candidates vying for the position of the next prime minister. The upcoming leadership change has sparked interest in how different economic approaches might impact the bond market.

Yield Movements

The 10-year JGB yield saw a decrease of 1 basis point, settling at 1.65%. Similarly, the five-year yield dropped by 0.5 basis points, reaching 1.22%. These movements reflect the market's reaction to the ongoing political developments and their potential economic implications.

Recent Pressures on JGBs

JGBs have faced several challenges in recent times:

Global deficit concerns
Domestic political uncertainty
Reduced bond purchases by the Bank of Japan

These factors have contributed to volatility in the bond market, with thirty-year yields reaching a record high of 3.29% earlier this month following Prime Minister Shigeru Ishiba's resignation announcement.

Leadership Race and Economic Policies

The Liberal Democratic Party has scheduled a vote for October 4 to determine the next prime minister. Among the candidates, two have garnered attention for their contrasting economic views:

Sanae Takaichi:
- Advocates for issuing more JGBs if necessary to address household inflation
- Her stance has been associated with the 'Takaichi trades', betting on higher stocks, a weaker yen, and a steepening JGB yield curve
Shinjiro Koizumi:
- Supports funding spending through increased tax revenues and spending cuts
- A potential Koizumi victory could lead to the unwinding of 'Takaichi trades', according to market analysts

Takaichi's Moderated Stance

It's worth noting that Takaichi has recently moderated her position by refraining from direct comments on the Bank of Japan's monetary policy or potential consumption tax cuts. This shift in tone may be an attempt to appeal to a broader base within the party and the electorate.

Market Implications

The outcome of the leadership race could have significant implications for the JGB market and broader economic policies. Traders and investors are closely watching the candidates' statements and policy proposals, adjusting their positions accordingly.

As the October 4 vote approaches, market volatility may persist as participants attempt to anticipate the economic direction under new leadership. The JGB market will likely remain sensitive to political developments and any shifts in the candidates' economic stances in the coming weeks.