Japan's 20-year bond yield falls sharply after strongest auction on record
TLT•Japan's 20-year government bond yield fell as much as 6 basis points to 3.71% after an auction drew bids worth 5.84 times the amount sold, the highest ratio since the bonds were first sold in 1987.
1. Record auction demand
The 20-year JGB yield was last down 4.5 basis points at 3.725%, while the 30-year yield fell 5 basis points to 3.935% and the 40-year yield declined 6 basis points to 4.05%. The benchmark 10-year yield rose 1.5 basis points to 2.920%.
2. Rate outlook and sentiment
Resona Asset Management fund manager Takashi Fujiwara said growing expectations that Bank of Japan rate hikes may end as early as March next year were positive for the super-long sector. He said expected inflation was likely to remain stable, meaning the central bank would not have to raise rates aggressively. Sumitomo Mitsui Trust Asset Management strategist Katsutoshi Inadome said the auction suggested investors expected a bond-market rebound after turning risk-off following protests in France and a sell-off in CoreWeave stocks and bonds.
