Demand at Thursday's 2-year JGB auction came in below the 12-month average as
markets broadly expect the BOJ to tighten: bid-to-cover 3.63 versus 4.82 at the
prior auction and a 12-month average of 3.81. The tail (average price minus
lowest accepted price) widened to 0.007 from 0.005 last month, signaling weaker
investor interest. Short-term yields have risen amid higher oil and
fuel-inflation worries tied to Middle East tensions; the 2-year yield is 1.47%,
near this month's 1.52% high. The moves add pressure on the BOJ to raise rates.
