Demand at Thursday's 30-year Japanese government bond auction exceeded the
12-month average, with a bid-cover ratio of 3.79 — down from 3.86 at the prior
auction but above the 12-month mean of 3.52. The tail was 28 bps, up from 21 bps
a month earlier. JGB futures held gains after the results. The auction occurred
amid a global government bond selloff; rising oil has heightened inflation
concerns and pushed up rate-hike expectations. Overnight index swaps now fully
price a BOJ rate increase for Sept. 18. Hawkish BOJ board member Takata has
signalled openness to large and consecutive hikes.
