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Japanese long-term bond yields slip as trade talks flounder
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Japanese long-term bond yields slip as trade talks flounder
Jul 1, 2025 9:15 PM

SINGAPORE, July 2 (Reuters) - Japanese government bonds

rose slightly on Wednesday, pushing yields at the long-end of

the curve down, as protracted trade negotiations and uncertainty

around upcoming national elections spurred a bid for safe-haven

bonds.

The September contract, the main contract for JGB

futures, was down 5 sen at 139.17 yen.

The 30-year JGB yield fell 0.5 basis point

(bp) to 2.885%.

Support for Japanese Prime Minister Shigeru Ishiba's

government has slipped ahead of key upper house elections slated

for July 20, an NHK poll showed on Monday. Ishiba's cash handout

plan to help the public deal with inflation has failed to

impress voters.

Japanese investors are also dealing with the worry the

country has yet to secure a trade deal with the United States

after nearly three months of negotiations.

Tokyo has been scrambling to convince the U.S. to scrap a

25% tariff on Japanese cars and a 24% reciprocal tariff on other

Japanese imports. The reciprocal tariff has been paused until

July 9, but President Donald Trump has indicated a deal may not

happen by then.

Trump has also suggested he could impose a tariff of "30% or

35% or whatever the number is that we determine" on imports from

Japan - well above the tariff rate he announced on April 2 and

then later paused.

"I get the impression that the market is starting to pay

attention to the reality that the outlook for Japan-U.S. trade

negotiations has become even more uncertain, with concrete

numbers now being released," said Daisuke Uno, chief strategist

at Sumitomo Mitsui Banking Corporation.

The 10-year JGB yield rose 0.5 bp to 1.415%

while 10-year interest rate swaps were at 1.25%.

They have traded in a wide range between 0.8% and 1.4% this

year.

Traders said some of the buying of long-term bonds was led

by short-covering ahead of a 30-year bond auction scheduled for

Thursday.

At the short end of the rates markets, the overnight call

money rate was quoted at 0.477% and the one-month

Japanese yen treasury bill fell 0.4 bp to 0.454%.

The 20-year JGB yield fell 0.5 bp to 2.315%.

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