Rates Spark: Treasurers Look At Issuance Strategies To Ease Pressure

2025-05-28 12:10:00 ET

Summary

• A potential reduction in Japan's government bond supply is pushing down longer-dated global yields.
• But fiscal concerns continue to linger, thereby limiting the downside potential of UK gilt yields.
• Tariffs continue to drive the short end of the curve, and relatively good consumer confidence data from the US shows the Fed is not yet in a position to cut.

By Benjamin Schroeder , Michiel Tukker

Treasurers are looking at issuance strategies to ease upward pressure on yields

The global fiscal/supply-themed curve steepening has noticeably turned on the back of long-end Japanese government bonds (JGBs) rallying over the past session. A survey sent out by Japan’s Ministry of Finance suggested a potential reduction in issuance. Tuesday’s rally in 30y US and EUR rates did not go as far as the 19bp drop in Japanese Government Bonds, but declines of around 5bp brought the 30y US Treasury yield back below 5% and the 30y Bund even below the starting levels of the previous week. The demand for the 40y JGB auction earlier today was weak, however, suggesting still fragile sentiment....

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