Japan 10-year yield retreats from near-decade high after smooth auction
JAPANESE benchmark 10-year government bond (JGB) yield retreated from an over 9½-year high on Tuesday (Sep 12) after a smooth auction of five-year notes snapped a string of weak sales, buoying sentiment.
The benchmark 10-year JGB yield last sat flat at 0.705 per cent after earlier reaching 0.72 per cent, its highest since Jan 7, 2014.
The five-year yield, meanwhile, fell one basis point (bps) to 0.27 per cent following the auction, reversing from a fresh eight-month high of 0.29 per cent.
The tail – the difference between the lowest bid and the average bid at the auction – was 0.02 yen, compared with 0.03 yen at last month’s auction, suggesting that the newly issued five-year bond “was digested smoothly”, according to Shoki Omori, chief Japan desk strategist at Mizuho Securities.
Japan’s Ministry of Finance said the yield at an auction of five-year government bonds on Tuesday averaged 0.291 per cent, with the lowest accepted level at 0.295 per cent.
Recent auctions have been weak as even long-term buyers wait for an eventual rise in yields after the Bank of Japan (BOJ), so far an outlier among hawkish global central banks, tweaked its yield curve control policy late in July.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
There had been concerns that the five-year auction would face similarly poor demand, said Omori.
“The fact that the BOJ will conduct rinban operations tomorrow could have provided psychological support.”
The 20-year JGB yield was 0.5 bps higher at 1.46 per cent, slightly down after hitting an over nine-year high of 0.47 per cent earlier in the session.
The 30-year JGB yield rose 0.5 bps to 1.715 per cent.
The two-year JGB yield hit 0.05 per cent before falling 0.5 bps to 0.035 per cent. REUTERS
Share with us your feedback on BT's products and services
