Japanese ultra-long-term government bonds continue to rebound, and market sentiment is stabilizing.

Japanese government bonds rebounded for the second consecutive day, with ultra-long-term bonds leading the gains. Prime Minister Takamori Sanae promised tax cuts on the eve of the election, triggering a sharp drop in government bonds at the beginning of the week. Currently, market sentiment has stabilized. The 30-year Japanese government bond yield fell by 10 basis points to 3.62%, while the 20-year and 10-year government bond yields fell to 3.185% and 2.23% respectively. Japanese Finance Minister Katsuyuki Katayama called for calm in the bond market after the sharp drop, and some institutional investors see the recent rise in yields as a good buying opportunity. Higher yields may prompt Japanese investors to consider reallocating some overseas assets to Japanese government bonds. Chief bond strategist at Okasan Securities, Naoya Hasegawa, stated that discussions about lowering the consumption tax have been digested by the market, but he warned that due to the uncertainty surrounding the election and subsequent parliamentary deliberations, sustained buying pressure may still be difficult to materialize.