Japan's 10-year government bond yield hit a 29-year high on Tuesday, despite a moderately firm auction, as the market awaited comments from U.S. Treasury Secretary Scott Bessent, who is visiting Tokyo.
The 10-year JGB yield rose 2.5 basis points to 2.545%, its highest since June 1997. The five-year JGB yield rose 2 bps to a record high of 1.925%. The market weighed the possibility of Bessent urging Japan to take measures to prevent a JGB selloff or renew his calls for speedier rate hikes by the Bank of Japan as a way to support the yen.
"The market is on guard around Bessent's comments that would affect Japan's monetary policy and finance, as well as the foreign exchange market," said Masayuki Koguchi, executive fund manager at Mitsubishi UFJ Asset Management.
Bessent met his counterpart, Satsuki Katayama, earlier in the day and is expected to meet Prime Minister Sanae Takaichi before his three-day visit wraps up on Wednesday.
"The market will be alert until Bessent leaves Japan," said Katsutoshi Inadome, a senior strategist at Sumitomo Mitsui Trust Asset Management. Earlier this year, Bessent told Japan that the country's rising debt yields had triggered a triple selloff in the United States and urged it to respond.
Japan's super-long bond yields hit a record high in January on concerns about the government's aggressive spending.
On Tuesday, the 30-year yield jumped 5 bps to 3.81% as investors weigh an auction for the bonds with the same maturity on Thursday, Inadome said. The 20-year bond yield climbed 4 bps to 3.445%.
