Japan’s 30-year bond yield at 21-year high as bonds sell off

TOKYO: Japanese 30-year government bond yields surged to 21-year highs on Wednesday as investors dumped their most liquid holdings to raise cash in a market rout caused by U.S. trade tariffs.

With stock markets and oil prices plunging, the 30-year JGB yield rose to as high as 2.785%, its highest level since August 2004, and was last up 22 basis points (bps) at 2.715%.

The selloff in JGBs, typically seen as a haven during market crises, mirrored those in U.S. Treasuries, where long bonds faced intense selling from hedge funds which had borrowed to bet on the now crumbling markets.

“Yields on super-long bonds have moved up to beyond the level they were at before Trump announced the tariffs, this is like panic selling,” Katsutoshi Inadome, a senior strategist at Sumitomo Mitsui Trust Asset Management said.

Traders pointed to how the selloff in Treasuries and JGBs had caused an unwind of basis trades, which refer to common hedge fund strategies to exploit small gaps between cash bond and futures prices.

Ten-year U.S. yields crossed 4.5% at one point, up 16 basis points in Asia and more than 50 basis points from Monday’s low.

JGB yields hit multi-month lows as US tariffs sow recession fears

The 20-year JGB yield rose 22 bps to 2.325%, its highest level since June 2008.

Japan’s central bank, finance ministry and banking regulator called an unscheduled meeting for 0700 GMT to discuss the moves, news of which pulled back some of the extreme selling.

“The market was worried about the risks of financial deterioration in Japan, as the government plans to provide measures for domestic firms as well as individuals to fend off the impact of the U.S. tariffs,” said Katsutoshi Inadome, a senior strategist at Sumitomo Mitsui Trust Asset Management.

U.S. President Donald Trump’s “reciprocal” tariffs on dozens of countries took effect on Wednesday, including massive 104% duties on Chinese goods, deepening his global trade war even as he prepared for negotiations with some nations.

Japan’s 10-year JGB yield rose as much as 10 bps to 1.355%, and was last at 1.285%, up 3 bps from the previous session.