Bonds Continue Their Decline as Asian Stocks Pull Back – Asia Market Wrap

Japanese bonds joined a global debt slide as a rush of corporate debt sales and fears about developed-world budgets weighed on European fixed-income instruments and Treasuries. Higher yields impacted on markets, sending Asian stocks to their lowest level in three weeks.

Yields on 20-year Japanese government bonds increased to levels not seen since 1999, while 30-year yields reached their highest level since their inception. Longer-dated German bond futures fell for the fifth consecutive session. US 30-year bond yields remained near 5% following a rise on Tuesday that impacted on Wall Street.

The Yen fell amid political uncertainties in the country, as a Dollar index surged for the second straight day.

Treasuries fell Tuesday, matching drops in longer-maturity European bonds at the start of a traditionally difficult month for debt markets. The fragility of global long-term government debt stems from the buildup of heavy spending, which necessitates increased bond sales to fund, as well as an overall trust deficit in sovereign debt.

Meanwhile, investors in Japan are anxious about political uncertainty after a key power broker for PM Ishiba stated that he will stand down as secretary-general of the Liberal Democratic Party if Ishiba agrees.