Yields on super-long Japanese government bonds (JGBs) fell sharply on Tuesday after Reuters reported the country's finance ministry might issue fewer of these bonds.
The 30-year JGB yield fell sharply following the report, dropping 18.5 basis points (bps) to 2.85%. It traded as high as 2.955% earlier in the session.
The 20-year JGB yield fell 16.5 bps to 2.34%, after trading as high as 2.44%, while the 40-year yield sank 24 bps to 3.295%, after touching a session high of 3.435%.
The 30-, 20- and 40-year yields had all fallen by smaller margins earlier in the session on expectations that the government would step in to curb a sell-off in super-long bonds.
The yields extended their declines after Reuters reported that Japan's Ministry of Finance (MOF) will consider tweaking the composition of its bond programme for this fiscal year, which could involve trimming the issuance of super-long bonds.
Last week, yields surged to record levels as a weak auction of the 20-year paper coincided with concerns about political jockeying over a government stimulus program and the likelihood that the Bank of Japan (BOJ) would curb its purchases.
"The yields on bonds with super-long maturities extended declines (after the Reuters report), but those on shorter-dated bonds rose on concerns that the MOF may increase the sale of those bonds," said Naoya Hasegawa, chief bond strategist at Okasan Securities.
The 10-year JGB yield was off just 4 bps to 1.465%.
The two-year JGB yield was last up 1 bp to 0.73%.
