Japanese government bond yields fell sharply after the stock market crash on Wall Street caused by the Democrats' victory in the US Congressional elections.
Japanese government bond yields fell sharply across the curve on Friday. The benchmark 10-year yield dropped to 2,627 percent — the lowest level since June — and posted the strongest one-day decline since July.
On the short end of the curve, yields on Bank of Japan policy-sensitive securities plunged to 1,731 percent, reaching a low since September and also recording the largest one-day drop since July.
The reason was the collapse of technology stocks on Wall Street on Thursday. The Nasdaq Composite index lost 5,52 percent and closed at 24 315 points — the worst result in 19 months. The broader S&P 500 index fell 4,36 percent to 7 353,73 points, and the Dow Jones Industrial Average dropped 3,44 percent to 51 523,06 points.
The catalyst for the sell-off was the Democrats' victory in the US Congressional elections. Investors revised the prospects for the artificial intelligence sector towards tighter antitrust regulation and environmental oversight of data centers.
The day before, JGB yields remained elevated after the publication of the minutes of the Bank of Japan's September meeting, which reinforced expectations of a further rate hike above 1,25 percent. On Friday morning, the Japanese stock market also declined: the key index lost 6,4 percent.