JGB yields slide as US Treasury buyback move lifts sentiment

Japanese government bonds (JGBs) advanced on Thursday, with yields falling across the curve, as investors drew confidence from the US Treasury's decision to expand liquidity support for longer-dated debt.

The benchmark 10-year JGB yield declined 5 basis points to 2.84%, while the 20-year yield slipped 7.5 basis points to 3.7%. Yields move inversely to bond prices.

The move came after the US Treasury Department said it would double the size of buyback operations aimed at supporting liquidity in longer-dated notes and bonds. That announcement triggered a rally in long-dated US Treasuries on Wednesday.

Traders were also positioning ahead of Japan's Ministry of Finance auction of 20-year bonds later in the session. The sale follows Tuesday's 5-year JGB auction, which drew the strongest demand since June 2025.

Takayuki Miyajima, senior economist at Sony Financial Group, said in a note that while the 20-year auction is expected to produce a solid result, the market's upside appears limited. He cited lingering uncertainty over monetary and fiscal policies as well as inflation trends.

The rally comes after long-term borrowing costs in the US, Germany, and Japan hit multi-decade highs earlier this week. Those elevated yields reflected concerns about rising government debt and inflation pressures stemming from persistently high oil prices amid the Middle East conflict.

Shorter-dated maturities were steadier, with the two-year yield — the most sensitive to Bank of Japan policy expectations — and the five-year yield both holding unchanged.