Japanese government bond yields fell across the curve on Friday, with the 10-year yield posting its steepest single-day decline since July. A sell-off in Wall Street technology stocks drove investors into sovereign debt, overturning expectations built on hawkish Bank of Japan minutes.
The benchmark 10-year JGB yield dropped to 2.627%, its lowest level since June. Investing.com reports that the sell-off in US tech giants pushed institutional investors toward the safety of sovereign debt in a haven rush.
At the short end, the policy-sensitive two-year yield tumbled to 1.731%, its lowest mark since September. It also logged its largest one-day drop since July.
Nasdaq suffers its worst session in 19 months
The rush into Japanese bonds followed a heavy session on Wall Street. The Nasdaq Composite plunged 5.52% to 24,315.00 points on Thursday, its worst single-session performance in 19 months.
It closed more than 10% below its October 6 all-time high, confirming a technical correction. Meanwhile, the S&P 500 fell 4.36% to 7,353.73 points, and the Dow Jones Industrial Average slid 3.44% to 51,523.06 points.
Democratic sweep puts AI under scrutiny
The catalyst was a reassessment of the artificial intelligence boom after Tuesday's Democratic sweep of the US Congress. Chipmakers and infrastructure providers bore the brunt of the liquidation as investors recognized that an opposition-controlled House and Senate increases the odds of aggressive federal antitrust enforcement and tougher environmental oversight.
Equity shock overrides the hawkish BoJ backdrop
The shock reached Tokyo on Friday morning and overturned the domestic monetary narrative. Only 24 hours earlier, hawkish minutes from the Bank of Japan's September meeting had anchored Japanese yields and reinforced market wagers that policymakers would lift the policy rate above its current 31-year high of 1.25%.
Stocks in Tokyo fell as well, with the benchmark Nikkei 225 down 6.4%.
Source: Investing.com
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