No Matter What China Does, Japan Bond Yields Drop Toward Record

While global currency markets have swung between gains and losses this year, roiled by China’s efforts to manage its currency and a slowing economy, Japan’s bond market is marching relentlessly toward record-low yields.

Ten-year government securities climbed for a seventh day, the longest stretch since 2013. The yield on the debt maturing December 2025 fell 1 1/2 basis points to 0.205 percent as of 3:45 p.m. in Tokyo on Wednesday. That’s the lowest level for a benchmark bond since Jan. 20, 2015, when the yield touched an unprecedented 0.195 percent.

Japanese sovereign debt is advancing as the central bank buys about as many bonds as the government is selling to stimulate the economy and crude oil’s plunge to a 12-year low undermines expectations for inflation.

The bond market’s uninterrupted advance contrasts with global currencies, debt and stocks. The Aussie is soaring after China stabilized the yuan to unwind some of its worst-ever start to a year, U.S. Treasuries are falling to reverse part of Tuesday’s strongest gain in almost four weeks and stocks across the Asia-Pacific region are up by the most since Dec. 16 as they rebound from a three-year low.

“The risk-off mood that was led by China’s turmoil has not subsided, while the drop in Treasury yields and oil prices that followed last week’s U.S. jobs data has also provided a tailwind for the Japanese bond market,” said Satoshi Shimamura, head of rates and markets, investment strategy department at MassMutual Life Insurance in Tokyo.

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