Japanese government bonds rallied at the start of the week, with the benchmark 10-year futures climbing as much as 0.8 point to 138.85 in Osaka—the highest level since 8 July—and driving the corresponding yield 8.5 basis points lower to 1.465%. The move followed a weaker-than-expected U.S. employment report that intensified expectations the Federal Reserve could deliver a 50-basis-point rate cut in September, stoking demand for safe assets ahead of Japan’s ¥10-year debt auction on Tuesday. The rally was concentrated in the belly of the curve. Yields on Japan’s 30- and 40-year bonds edged higher to 3.11% and 3.38%, respectively, flattening the curve as investors positioned for looser global monetary policy while remaining cautious about longer-term inflation risks. Equity markets across the region reflected the shift in sentiment. Tokyo’s Nikkei 225 fell around 1.5% and broader Asia-Pacific benchmarks traded mixed as the poor U.S. payrolls data deepened concern over the health of the world’s largest economy. The U.S. Dollar Index slipped before stabilising, mirroring bets on Fed easing and adding to the bid for yen-denominated government debt.