Selling pressure on Chinese bonds pressed the pause button! The yield on 30-year bonds fell from the 1999 high.

Notice that on Wednesday, Japanese long-term government bond prices stopped falling and rebounded, reversing the sharp decline earlier in the week triggered by concerns about the potential increase in government spending due to the upper house elections. The 30-year government bond yield fell 10 basis points to 3.06%, while the 40-year yield also dropped 10 basis points to 3.38%. The 30-year yield had previously climbed to its highest level since 1999 on Tuesday. "This wave of buying is clearly a reaction to the intense selling yesterday," said Katsutoshi Inadome, Senior Strategist at Mitsubishi UFJ Trust and Asset Management. "Although the market remains cautious about fiscal stimulus policies after the upper house elections, the upward momentum in yields has temporarily halted, with the market now waiting for the election results." As the July 20th elections approach, Japanese government bond yields continue to be under pressure, with the prospect of the ruling coalition losing its majority seats intensifying concerns about the fiscal outlook. Strategist Mark Cranfield pointed out, "The USD/JPY exchange rate has reached a three-month high, and with traders positioning for the potentially chaotic upper house elections on Sunday, Japanese government bond yields will continue to face upward pressure." The Bank of Japan is gradually reducing its large-scale bond purchase program, and large domestic life insurance companies have not filled this gap, further pushing up yields. "Political anxiety before the elections continues, but the market seems to have completed a phase of selling," said Michael Brown, Senior Research Strategist at Pepperstone. "The market is likely to wait for the election results before taking further action."