Japanese government bond (JGB) yields fell to multi-week lows on Monday, pressured by declines in U.S. Treasury yields and as domestic long-term investors bought longer-dated bonds into the fiscal year-end. The 10-year JGB yield declined 3 basis points (bps) to 0.685% as of 0530 GMT, the lowest level since Feb. 2. The 20-year JGB yield lost 3 bps to 1.420%, the lowest in a month, while the 30-year yield dropped 3.5 bps to 1.680%, a level last seen on Jan. 18.
A sell-off in the U.S. government bond market is picking up speed, as a strong economy whittles away at hopes for imminent interest rate cuts from the Federal Reserve. Over the last month, investors have roughly halved the number of cuts they expect the Fed to deliver in 2024, amid booming job growth and stubborn inflation that have made the U.S. central bank hesitant to ease monetary policy too soon. That has exacerbated losses in bonds, complicating the outlook for investors who had bet Treasuries would rise as the Fed cut borrowing costs.
The U.S. economy is seemingly on solid ground, but the Treasury bond market is sounding its most severe recession alarm in decades.