Japan's Long-Term Bond Yields Retreat After Minister's Pension Remarks

Japan's long-term government bond yields retreated after climbing to near their highest levels in almost three decades, as the 10-year yield fell about 10 basis points to roughly 2.77% following comments from Finance Minister Satsuki Katayama. She said the government would encourage domestic pension funds to increase their holdings of Japanese financial assets, remarks that helped calm a market rattled by concerns over the country's fiscal path. Yields had risen sharply in preceding sessions amid worries about a major long-term spending plan, with the government unveiling a draft roadmap calling for more than 370 trillion yen in public and private investment by fiscal 2040 across strategic sectors. That prospect raised fears of heavier bond issuance at a time when the Bank of Japan has been raising interest rates, having lifted its policy rate to 1% in June, the highest since 1995. Oil-price moves tied to the US-Iran conflict have added to inflation and fiscal pressures for the import-dependent economy. A revised government policy draft also called for monetary policy that appropriately supports stable price growth, language markets initially read as an attempt to temper the pace of further rate hikes.