Japan’s 30-year government bond auction drew firm demand as elevated yields attracted investors. The bid-to-cover ratio at Thursday’s sale was 3.88, surpassing the previous auction’s 3.79 and the 12-month average of 3.56. Japan’s bonds remained steady post-sale, though global bonds face pressure from inflation concerns tied to the US-Iran war and worsening government finances. Japan’s 30-year yield hit its highest level since debut this week. “The auction was somewhat strong, helped by high yields,” said Miki Den, senior rates strategist at SMBC Nikko Securities. “But super-long bonds remain difficult to buy in the secondary market amid concerns over fiscal expansion.”
Investors remain cautious about Japan’s fiscal policy as Prime Minister Sanae Takaichi seeks to enact a bill cutting the sales tax on food and soft drinks, with unclear funding mechanisms potentially requiring additional debt. The government is also considering a second supplementary budget for fiscal 2026, per Yomiuri. Japan’s 10-year bond auction Tuesday saw solid demand, while US long-term yields pared gains after a 10-year note sale signaled rates at multidecade highs are fueling investor appetite.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing