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10yr JGB Yields set to top 2% soon

ADMIN || 3rd December 2025

JGB traders are showing no sign of giving up on the path toward 2% yields for 10-year bonds, despite a solid auction this week. Currently its trading at 1.87%.

The rollover into the March futures contract is beginning with shifts in open interest, suggesting that investors are rolling short positions into next year. There’s also a natural instinct to stay defensive ahead of Thursday’s 30-year sale, with yields hovering near the highest level since that tenor debuted more than 20 years ago.

However, since Kazuo Ueda became BOJ Governor the time lapses between interest rate hikes has been several months. That suggests if an increase is confirmed this month, it is very unlikely to be followed by another in January, which will invite investors to snap up long-dated debt for the roll down the yield curve. That’s already starting to play out in the 40-year sector which is outperforming shorter tenors.

For now, everything circles back to the Dec. 19 BOJ meeting where a 25-bp move still isn’t fully priced. That will keepdownward pressure on JGB futures in the near term.

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