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Investing.com -- The recent auction of 40-year Japanese government bonds (JGBs) experienced the lowest demand in almost a year, indicating investor caution as global yields on ultralong bonds rise.
This event has accelerated an increase in superlong JGB yields, which occurred on Wednesday. This pattern is part of a broader trend that shows concern over fiscal deficits in major economies, such as the U.S. and Japan.
Despite the movement in bond yields causing some unease, analysts believe that the increase in Japanese yields is likely to be short-lived and manageable.
The Ministry of Finance in Japan sold approximately 500 billion yen ($3.46 billion) of 40-year bonds at a yield of 3.135%. The bid-to-cover ratio, an essential indicator of demand, dropped to 2.21 in Wednesday’s sale from 2.92 in March. This is the lowest level since July 2024, and a lower ratio signifies weaker demand.
After the auction, yields on 30-year JGBs momentarily spiked 11 basis points to 2.940% in a notably sharp move before settling back to 2.900%. The yield on 20-year JGBs rose to as much as 2.425%, while the yield on the 40-year bonds hit 3.385%.
The increase in ultralong JGB yields mirrors similar trends in U.S. Treasury yields and indicates a decrease in domestic investor interest for longer durations.
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