Japan's 5-year bond yield steadies after firm auction outcome
TLT•Japan’s five-year government bond yield was little changed at 2.34% after an auction drew bids worth 3.56 times the amount sold, above the past-year average of 3.36 times.
1. Auction draws firm demand
The five-year JGB yield traded flat at 2.34%, retreating from an earlier session high of 2.35%. The Ministry of Finance auction received bids worth 3.56 times the amount sold, compared with a past-year average of 3.36 times.
2. Rate outlook supports bonds
Resona Asset Management fund manager Takashi Fujiwara said demand was supported by declines in French bond yields and market expectations that the Bank of Japan’s rate-hike cycle is nearing its end. He said market players see the BOJ’s terminal rate at 1.75% to 2%, reached in June next year, and see limited upside risks for inflation expectations.
3. Other yields edge lower
France’s 10-year yield fell to 4.8034% on Tuesday, from 4.8958% on Monday. Japan’s 10-year JGB yield slipped 0.5 basis point to 2.995% after the auction.
