Global Bond Rally Stalls as BOJ Hike Bets Meets US Jobs Caution

The sizzling global bond rally stalled on Thursday ahead of a key US jobs report, with a slump in Japanese debt adding to the nerves of Treasury traders already fretting that yields had dropped too far.

The yield on 10-year US notes jumped as much as eight basis points to 4.18%, paring declines this week to two basis points. Similar-dated Japanese yields soared by the most this year, after a weak auction of long-term debt and comments from central bank Governor Kazuo Ueda on more challenging policy ahead. European bonds also fell.

The correction comes after a strong run for global bonds fueled by ramped up bets on interest-rate cuts by major central banks. Investors are now turning their attention to Friday’s US payrolls to fine tune bets ahead of next week’s Federal Reserve, European Central Bank and Bank of England meetings. The Bank of Japan meets the following week.

“The rally in the global bond market has gone very fast and far in November, so it is reasonable to pause,” said Janet Mui, head of market analysis at RBC Brewin Dolphin.

Treasury Yield Slump Halted by Japan Bond Move