TOKYO: Japanese government bond (JGB) yields sank on Monday, following a decline in U.S. yields amid concerns of a recession, while investors questioned bets that the Bank of Japan (BOJ) would raise interest rates again this year.

U.S. Treasury yields stumbled as traders wagered that the Federal Reserve will likely need to be aggressive in cutting interest rates after weak jobs data stoked worries that the U.S. economy could be heading for a recession.

The 10-year JGB yield fell to as low as 0.785%, a level not seen since April 9. It was last down 13.5 basis points (bps) at 0.82%.

Benchmark 10-year JGB futures jumped over 2 yen, triggering a temporary circuit breaker, before settling at 145.44 yen.

The drop in JGB yields comes alongside another sharp fall in Japanese equities, which tumbled to their weakest levels since early January during the morning session.

JGB yields drop to six-week lows as weak US data weighs

Naka Matsuzawa, chief macro strategist at Nomura, cited receding bets for the BOJ to raise rates further this year as another factor for the fall in JGB yields, adding that the bank could be more hesitant to hike given the current market stress.

“I think the BOJ can go back to the rate-hike path, but it’s going to be slower than previously expected.”

Matsuzawa added that he expects yields to stay around current levels until equities and the yen settle down.

Minutes from the BOJ’s June meeting underscored how the yen’s declines were among key factors discussed then, and led to its decision in July to raise rates.

The yen has since swiftly appreciated, hitting a seven-month peak on Monday.

The 20-year JGB yield slid 12 bps to its lowest since April 19 at 1.6%, and the 30-year yield fell 11 bps to a three-month low of 1.965%.

The two-year JGB yield was down 8 bps at 0.33%, while the five-year yield declined 13.5 bps to a four-month low of 0.44%.