JGB yields fall from multi-decade highs after strong 30-year auction

TOKYO: Japanese government bond yields fell from multi-decade highs on Tuesday after a sale of super-long-term debt showed strong demand.  

Here are a few details:

The benchmark 10-year JGB yield eased 2.5 basis points to 2.805%, pulling back from the highest level since October 1996. Yields move inversely to bond prices.

The 20-year yield dropped 4 bps to 3.765%, down from the highest level in data going back to 1999.

The 30-year yield slid 7 bps to 4.005%.

The Ministry of Finance sold about 600 billion yen ($3.70 billion) in 30-year JGBs on Tuesday.

The bid-to-cover ratio, a measure of demand, rose to 4.55, the highest since May 2019.

JGB yields have been on the rise this month, particularly in the long and super-long end, driven by inflation concerns, a sharply weaker yen and worries about fiscal expansion.

“The auction was strong because the level of the yield was high,” said Yuki Kimura, a bond strategist at Okasan Securities. “There is a certain demand for super-long bonds when their yields rise. But concerns about the expansion of government spending have not been removed, so the yields are not going to keep falling.”

The two-year yield, the one most sensitive to Bank of Japan policy rates, eased 0.5 bp to 1.385%, while the five-year yield decreased 0.5 bp to 1.935%. ‑Reuters