FX.co ★ Japan 10Y Yield Hovers Near 1-Month Lows

Japan’s 10-year government bond yield traded around 2.13% on Wednesday, holding near its lowest level in more than a month as fiscal concerns eased. Strong demand at Tuesday’s five-year JGB auction prompted investors to add to long positions, putting further downward pressure on yields. Top fund manager Mark Nash bought 10-year JGBs after closing a long-running short, pointing to reduced political risk following Sanae Takaichi’s decisive election win.

Separately, Bank of Japan Governor Kazuo Ueda noted that Prime Minister Takaichi made no specific policy requests during their regular meeting on Monday, reinforcing expectations that the government will not interfere with the BOJ’s plans for gradual policy normalization.

On the data front, Japan’s trade deficit narrowed in January, supported by double-digit export growth and weaker imports, while manufacturers’ sentiment improved in February.