Japan bond yields retreat; 30-year auction uneventful

TOKYO: Japanese government bond (JGB) yields retreated on Thursday after rising for successive sessions, as investors reassessed inflation risks and the prospect of a US interest rate hike, while the 30-year bond auction was largely uneventful as expected.

Here are a few details:

The benchmark 10-year JGB yield fell 4 basis points (bps) to 2.970%. Yields move inversely to bond prices.

The bid-to-cover ratio at the 30-year bond auction, a measure of demand, was 3.79 times, compared with 3.86 times at the previous sale.

The auction tail was 0.28, versus 0.21 in August.

The 30-year yield was unchanged after the auction, down 9.5 basis points on the day at 4.070%.

“Compared with the previous auction, the tail was slightly wider and the bid-to-cover ratio was a little lower, so looking only at those points, the result may seem somewhat weak.

But compared with averages over the past several auctions and the broader trend, it was not that bad,“ said Takayuki Miyajima, senior economist at Sony Financial Group.

The 2-year yield, the most sensitive to Bank of Japan policy rates, decreased 0.5 bp to 1.85%. The 20-year JGB yield slid 8 bps to 3.805%.

The 5-year yield fell 2 bps to 2.290%.

US Treasury yields slipped from multi-year highs on Wednesday, with the benchmark 10-year yield on pace to snap a five-session streak of gains.

The ADP National Employment Report showed US private payrolls increased less than expected in August.

Federal Reserve Bank of New York President John Williams tempered expectations of a rate hike this month.

JGB yields had risen in recent sessions alongside global peers, reflecting investor concerns over inflation and government debt levels.

Meanwhile, the Japanese yen extended gains on Thursday after surging in the previous session, as investors repriced domestic interest-rate expectations in a more hawkish direction.