JGB Yields Fall as Global Markets Steady and BOJ Hike Outlook Shifts

Japanese government bond yields fell on Friday as global markets steadied and investors reassessed the outlook for central bank tightening. The benchmark 10-year JGB yield eased to a low last seen in mid-September, touching 3.050%. This comes after a volatile week for global bond markets.

The US Treasury yields also fell from multi-decade highs as dip-buyers stepped in and Federal Reserve officials signaled a more patient approach to further rate hikes. Market pricing now points to the next Bank of Japan hike likely coming in December rather than October, driven by the strength of US Treasuries and heightened risk aversion.

Takayuki Miyajima, senior economist at Sony Financial Group, noted that 'Today's Japanese bond market is expected to see buying dominate.' However, he also warned that upside risks to inflation persist due to high crude oil prices and rising food costs. This has not completely faded market expectations for further rate hikes.