Japan’s 20-year government bond auction on Tuesday drew demand above the
12-month average, with a bid-cover ratio of 4.01 versus 3.98 at the prior
auction and a 12-month average of 3.73. The tail (average price minus lowest
accepted price) was 0.15, down from 0.17 last month, signaling firm investor
interest; JGB futures pared losses after the results. Japanese yields have risen
this month as escalating Middle East tensions pushed oil higher and spurred a
global bond sell-off; the US 10-year Treasury yield topped 5% amid rising
inflation risk and higher odds of Fed tightening at this week’s meeting. BNP
Paribas Asset Management senior bond strategist Ryutaro Kimura said: "Given
upside inflation risk putting upward pressure on global rates, the outcome is
not as worrying."
