Demand at Tuesday’s 10-year JGB auction exceeded the 12-month average, with a
bid-cover ratio of 3.76 versus 3.29 at the previous auction and a 12-month
average of 3.21. The tail (average accepted price minus lowest accepted) was
0.02 percentage points, down from 0.12 last month. Benchmark 10-year JGB yield
touched 3.115%, matching the highest level since 1996; higher yields supported
buying and domestic market conditions bolstered the auction after last month’s
same-maturity sale cleared at around 3%. Market expectations for October rate
hikes in both Japan and the U.S. have eased, and Takaichi Sanae’s government has
sought to allay fears it would pursue inflationary policy or pressure the BOJ to
keep borrowing costs low.
