Chinese government bond market turmoil pauses! The ultra-long end rebounded for two consecutive days, and the market focused on the policy orientation of the central bank.

The Japanese government bonds rebounded for the second consecutive trading day, with super long-term varieties leading the gains. Earlier, market selling was triggered by Prime Minister Nao Nakanao's tax reduction campaign promise, causing a sharp decline in Japanese government bond prices at the beginning of the week. Currently, market sentiment is stabilizing. The 30-year government bond yield once dropped by 10 basis points to 3.62%, while the 20-year and 10-year yields fell to 3.185% and 2.23% respectively. On Tuesday, the yield of some maturity government bonds soared by over 25 basis points, causing temporary chaos in the market. The rebound was attributed to Finance Minister Koizumi calling for calm in the market and some fund managers viewing the recent rise in yields as a good opportunity to buy at a lower level. The higher yields are becoming increasingly attractive, possibly prompting domestic investors to consider reallocating some of their overseas holdings back to Japanese government bonds. Kazuya Fujiwara, fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities, said: "The sharp drop in long-term yields reflects a rebound in bonds after being oversold earlier this week. Volatility in the bond market remains high, so yields often experience sharp fluctuations." Investors are concerned that the government and the central bank may need to take more measures to curb the surge in yields. Yuichiro Tamaki, leader of the Democratic Party of Japan, suggested on Wednesday that further actions such as repurchasing government debt and reducing the issuance of 40-year government bonds could be considered. Traders will closely monitor the Bank of Japan's policy decision on Friday, as well as any comments from Governor Haruhiko Kuroda on the market. In addition, the auction of 40-year government bonds next week will also be a focus in the market. Naoya Hasegawa, Chief Bond Strategist at Okayama Securities, noted: "The discussion on reducing the consumption tax has been digested by the market." However, he warned that due to the uncertainty surrounding election campaigns and parliamentary deliberations, "sustained buying demand is still difficult to materialize."