Benchmark 10-year JGB futures maturing in June up 0.25 point in early trade

Benchmark 10-year JGB futures maturing in June up 0.25 point in early trade

Japanese government bond yields experienced a significant retreat on Tuesday, following a robust auction of 10-year securities. The 10-year yield (JP10YTN=JBTC) dropped by 3 basis points to 1.475%, reversing an earlier rise of up to 1.5 basis points. This decline occurred as Japanese yields initially tracked an advance among U.S. peers from overnight trading [1].

The auction, which saw the highest demand since April last year, resulted in a bid-to-cover ratio of 3.663, up from 2.544 at the previous sale in May. This ratio measures the number of bids against the amount of securities on offer and indicates strong investor interest [1]. Mizuho's chief desk strategist, Shoki Omori, described the auction results as "a remarkably robust outcome ... that likely caught most observers off guard" [1].

Benchmark 10-year JGB futures (2JGBv1) rose 0.14 yen to 139.16 yen, reflecting the increased demand for the bonds. The auction of 1.96 trillion yen ($13.71 billion) in securities helped to soothe investor nerves following poorly received bond sales last month, which had pushed Japan's longest-dated yields to record peaks [1].

The auction also led to a decrease in shorter-dated yields. The five-year JGB yield (JP5YTN=JBTC) lost 1 basis point to 1.02%, while the two-year JGB yield (JP2YTN=JBTC) remained flat at 0.75% [1]. The 20-year JGB yield (JP20YTN=JBTC) trimmed an earlier advance to be up 0.5 basis points at 2.40%, and the 30-year yield (JP30YTN=JBTC) was also up 0.5 basis points at 2.935% [1].

The strong auction results are likely to influence the market's appetite for Japanese government bonds, particularly as the 30-year JGB auction is closely watched on Thursday. The Finance Ministry's plan to examine adjusting issuance to address supply-demand imbalances in so-called super-long bonds could also impact future bond yields [1].

References:
[1] Reuters. (2025). Japanese government bond yields retreat after strong 10-year note auction. Retrieved from https://www.tradingview.com/news/reuters.com,2025:newsml_L2N3S602P:0-japanese-government-bond-yields-retreat-after-strong-10-year-note-auction/