Japanese bond futures fell initially then rebounded, with ultra-long-end bonds performing strongly.

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智通财经2026/10/13 09:06

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Japanese government bond futures came under pressure in the early Asian session, following the slight declines seen in German bonds, Australian bonds, and US Treasuries late last week, opening about 11 ticks lower compared to last Friday.
The curve steepened slightly in early trading, with the 2-year yield rising about 1 basis point and the 5-year yield up around 2 basis points, the latter's selling pressure related to the Ministry of Finance's upcoming 5-year bond auction.
Around 10 a.m., US Treasury yields moved lower during the Asian session, futures suddenly shifted direction, with the 30-year bond seeing buying, sending yields down about 1 basis point to around 4.04%.
Before midday, the 10-year also strengthened, with the benchmark yield dropping about 1 basis point from last Friday to 3.00%, futures breaking above the 125.00 mark, but the 5-year remained weak.
In the afternoon, the 10-year yield briefly fell below 3% for the first time since September 18, with futures hitting the day's high at 125.06.
Futures failed to hold their highs, as many investors were willing to add or open new short positions, with the 10-year yield rebounding to around 3.005%.
The curve flattened in the afternoon, with regional accounts selling old, low-coupon 30-year bonds, but the ultra-long end remained firm overall, absorbing this selling; the 30-year yield once dropped to 4.03%.
The market is watching Tuesday's 5-year bond auction. Some Japanese brokerage sources suggest that if the auction results are favorable, futures may return above 125.00, and a break above 125.10 could trigger short covering.
Overnight index swaps indicate the market's probability of a Bank of Japan rate hike in December has risen to around 91%, slightly higher than last Friday.
The Nikkei Index closed down about 1.8%, with USD/JPY around 158.30. The yen's weakness contrasts with the firmness at the ultra-long end. Attention now turns to the auction outcome and the impact of US Treasury moves on Japanese bonds going forward.

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Japanese bond futures fell initially then rebounded, with ultra-long-end bonds performing strongly.

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