yen bond sale effort had to increase interest rate, from 2.xx to 3.yy, closer to a real rate
un-good
"timber !!" in the forest
"fire!!!" in the theatre
"grenade!!!" without pin, in the elevator
you get the idea
now look in the away direction, and try best to un-see what you just saw
bloomberg.com
Firmer Japanese 40-Year Bond Sale Brings Some Relief to Market
By John Cheng
November 26, 2025 at 11:44 AM GMT+8
Updated on
November 26, 2025 at 3:41 PM GMT+8
Takeaways by Bloomberg AI
- Japan’s 40-year bonds gained after a sale met firmer demand, with the average bid-to-cover ratio at 2.59.
- The 40-year yield traded one basis point lower to 3.68% after the auction, while bond futures briefly erased losses before dipping again.
- The auction results provided some short-term relief as investors look to the finalized budget for the new fiscal year to gauge how the higher spending will translate into total sovereign bond issuance and market supply.
Japan’s 40-year bonds gained after a sale of that tenor met firmer demand, as an increase in yields attracted investors despite ongoing fiscal worries about Prime Minister Sanae Takaichi’s stimulus package.
The average bid-to-cover ratio, a key gauge of demand at the sale of the longest-maturity Japanese government bond, was 2.59 compared with a 12-month average of 2.48. Following the auction, the 40-year yield traded one basis point lower to 3.68% after being higher earlier, while bond futures briefly erased losses before dipping again.
“The 40-year JGB auction went smoothly, a small relief but nothing to cheer about,” said Wee Khoon Chong, a senior APAC market strategist at BNY, adding that the government’s expansive fiscal strategy will weigh on the market. “It is too early to turn positive yet on JGB, and the next set of JGB auctions in December should give the market better clues.”
Japanese government bonds have slumped in recent weeks on speculation of more bond issuance under the new premier’s economic plan, the biggest stimulus since Covid. The 40-year yield climbed to a record 3.745% last week.
The new bonds were sold at a yield of 3.555%, broadly in line with a Bloomberg survey.
“This implies that few investors bid strongly, and demand overall was limited,” said Miki Den, a senior rates strategist at SMBC Nikko Securities Inc. “It shows the market is not bullish on long-end JGBs because of Takaichi’s fiscal policy,” he said.
Takaichi’s likely goal will be to minimize the use of new bond issuance in an extra budget to finance the ¥17.7 trillion ($113 billion) in fresh spending cited in the package by finding other sources of funds and savings in already committed expenditure.
In her remarks in the parliament on Thursday, Takaichi said she’s watching the market situation and will take measures on the currency if needed, while also emphasizing the importance of fiscal sustainability.
The auction results provided some short-term relief as investors now look to the finalized budget for the new fiscal year to gauge how the higher spending will translate into total sovereign bond issuance and market supply through the year.
What Bloomberg strategists say:
JGB futures are holding above the lows touched earlier in the day as a relatively smooth 40-year sale adds to the calmer air across Japan’s markets on Wednesday.
With the yen moving further away from last week’s frantic lows and Japanese equities joining in with global exuberance, Tokyo trading desks are bidding farewell to at least some of their recent angst.
— Garfield Reynolds, MLIV Team Leader. Read more on MLIV.
The Ministry of Finance’s issuance slate through the end of the year includes an auction of two-year notes on Friday, followed by sales of 5-, 10-, 20-and 30-year debt in the coming two weeks. Speculation the Bank of Japan may hike interest rates again in December is putting some upward pressure on shorter-maturity yields.
Meanwhile, the ministry will meet with primary dealers of JGBs on Thursday. It has cut issuance of super-long bonds twice this year in an effort to reduce market volatility, as yields hover near multi-decade highs amid the BOJ’s gradual retreat from large-scale debt purchases.
“There is anticipation that requests for a future reduction in super-long JGB issuance will be conveyed to the ministry,” said Ryutaro Kimura, a senior fixed-income strategist at AXA Investment Managers. “This expectation may also have supported the smooth auction result.” |
