The Japanese government bonds slumped as investors cashed in profit on the last day pf the week. Also, investors await the Bank of Japan policy decision, which is scheduled to take place on July 29.
The yield on the benchmark 10-year bonds, which moves inversely to its price, rose 1 basis point to -0.219 percent, the yield on long-term 30-year note rose nearly 1 basis point to 0.277 percent, the yield on 20-year note also jumped 1 basis point to 0.192 percent and the short-term 2-year JGB yield remained steady at -0.322 percent by 07:20 GMT.
Moreover, speculations have cropped up in the market governing news that the Japanese government is considering twenty trillion yen (around 187 billion US dollar) worth of stimulus measures, with some suggestions that it could be even larger.
The Japanese Prime Minister Shinzō Abe also confirmed after the election result that he will instruct economy minister Nobuteru Ishihara to compile economy stimulus package and ask to implement economic measures to support domestic demand.
In addition, Japan Chief Cabinet Secretary Suga said that he is working with fiscal authorities on providing the required stimulus package. On the other hand, Nikkei in its report mentioned that Japan's stimulus package could be as large as 30 trillion yen.
In terms of economic data, Japan July manufacturing PMI (preliminary) rose to 49.0 from 48.1 in June. New export orders contracted at the fastest in more than 3-1/2 years, at 44.0.
Lastly, investors will remain keen to focus on the next weeks CPI data, industrial production, retail sales on Thursday at 23:30 GMT and BoJ policy decision on Friday.
Meanwhile, the benchmark Nikkei 225 index closed down -1.09 percent at 16,627.25, and the broader Topix index closed 0.89 percent lower at 1,327.51 points.
