TOKYO: Yields on longer-dated Japanese government bonds jumped on Friday, as weak demand at the Ministry of Finance’s liquidity-enhancing auction prompted investors to sell bonds.
Yields on the 20-year and 30-year JGBs climbed 7 basis points (bps) each to 1.355% and 1.585%, respectively.
The 40-year JGB yield rose 8.5 bps to 1.815%.
“The weak auction outcome came after yields fell, and that pushed overall yields higher,” said Naoya Hasegawa, senior bond strategist at Okasan Securities.
“The market probably thought the yield fell too much.”
Japan 10-year JGB auction average yield at 0.768%, yield at lowest accepted price 0.770%
The bid-to-cover ratio for the auction for the bonds with maturities between 15.5 and 39 years fell to 2.1 from 2.78 in the previous auction.
JGB yields had declined to multi-month lows this week as caution about the Bank of Japan’s exit from its negative rate policy faded.
The 10-year JGB yield rose 3.5 basis points to 0.620% and the five-year yield rose 2.5 basis points to 0.245%. The two-year yield rose 1 bp to 0.045%.
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