Japanese Yield Curve Flattens as BOJ Tightening Remains in Focus

The Japanese government bond (JGB) yield curve flattened on Tuesday as investors focused on the Bank of Japan's (BOJ) policy tightening efforts to curb inflation.

The long-term JGBs rallied, with yields on the 20-year, 30-year, and 40-year bonds dropping five, 5.5, and 5.5 basis points, respectively, to 3.695%, 3.965%, and 4.035%.

The two-year yield decreased by 1.5 basis points to 1.835%, while the five-year yield slipped two basis points to 2.230%.

Economic data showed Japan's economy was robust enough to withstand a rate hike, with real wages rising 2.4% in July from a year earlier, marking the biggest increase since May 2021.