(Bloomberg) — Browbeaten long-bond investors got some relief on Tuesday as a global debt rally sent benchmark yields tumbling. Most Read from Bloomberg Investors were lured to long-maturity bonds for the first time in weeks, offsetting — if only for a day — a selloff sparked by a deteriorating fiscal outlook and simmering tariff tensions. Thirty-year Treasury yields posted the biggest one-day slide since late March, following news on Tuesday that Japanese authorities may adjust debt sales following a market rout.
Solid demand for a $69 billion sale of two-year Treasuries added to the advance in the US. The day of gains comes even as President Donald Trump’s slew of tariff announcements and the passing of his signature tax bill in the House of Representatives slices into sentiment. Long-bond investors have fled the asset class in recent weeks as its so-called safe-haven status is called into question.
“There is a little bit more optimism. It’s certainly a calmer market,” Tony Rodriguez, Nuveen’s head of fixed income strategy, said on Bloomberg TV. Still, “We’re settling into a range that feels very tenuous because there’s so much uncertainty.” Earlier, Japanese authorities signaled they were considering adjusting their debt plan after a selloff that drove the nation’s long-term borrowing costs to the highest levels in decades.
Concern about the ability of governments to cover massive budget deficits weighed on developed-market debt in recent days, pushing long-dated US yields toward levels last seen in 2007. “That potential lower issuance is giving Treasuries a nice helping hand,” said Michael Brown, strategist at Pepperstone Group in London. “For those seeking to buy long-term debt, lower Japanese government bond supply could force them into the Treasury complex.” Japan’s finance ministry sent a questionnaire to market participants on Monday evening asking for their views on issuance and the current market situation, Bloomberg reported.
It was an unusual move and traders took it as a sign that authorities are seeking to stabilize the rout in long-dated bonds. Some other governments have already shifted issuance toward shorter-dated tenors. The UK has been steering away from longer bonds given falling investor demand, a strategy that was reinforced by Jessica Pulay, head of the debt management office, in an interview published with the Financial Times on Tuesday.
The yield on 30-year UK gilts fell as much as nine basis points on Tuesday as local markets were also shut on Monday, but the moves pared throughout the session. Similar-dated German rates dropped seven basis points to below 3%.
