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2025-11-04 20:38:35
[Japanese Government Bond Yield Curve Steepens, Market Faces Policy Shift and Supply Pressure] ⑴ The Japanese government bond market weakened across the board on Tuesday after a three-day holiday, with the 10-year futures contract falling 0.17 points to 135.87, hitting a low of 135.82 during the session. ⑵ The yield curve steepened significantly, with the 30-year yield rising sharply by 4.5 basis points to 3.085%, far exceeding the 2 basis point increase in the 10-year yield. ⑶ Investors were cautious ahead of Wednesday's 10-year bond auction and next Tuesday's 30-year auction, actively selling medium- and long-term bonds. ⑷ Market volatility intensified in the afternoon, with Jiji Press reporting that the Bank of Japan might consider raising interest rates to 0.75% at its December meeting, exacerbating selling pressure. ⑸ Futures market pricing indicated a 59% probability of a 25 basis point rate hike at the December meeting and an 86.5% probability at the January meeting. (6) Prime Minister Sanae Takahashi announced the establishment of a new growth strategy committee and emphasized the implementation of a "responsible and proactive fiscal policy." (7) Committee members include Crédit Agricole economist Takuji Aida and former Bank of Japan board member Tsuyoshi Kataoka, sparking market speculation about policy personnel arrangements. (8) The Nikkei index plunged 1.74% to 51,497 points, but the bond market did not see any inflows of safe-haven funds, reflecting the market's greater focus on bond supply and monetary policy risks. (9) Short-term focus shifts to Wednesday's 10-year government bond auction results; long-term yield trends will be driven by both the 30-year auction and central bank policy expectations.
