10-year Japanese government bond yield falls 1 basis point to 1.45%.

10-year Japanese government bond yield falls 1 basis point to 1.45%.

Japanese government bond yields experienced a notable drop on Tuesday, following a robust auction of 10-year securities. The 10-year yield decreased by 1 basis point (bps) to 1.45%, as of 0528 GMT, according to the Ministry of Finance. This decline comes after an earlier rise of up to 1.5 bps, mirroring initial movements in U.S. yields from overnight trading [1].

The auction of 1.96 trillion yen ($13.71 billion) saw the highest demand since April 2024, with a bid-to-cover ratio rising to 3.663 from 2.544 at the previous sale in May. This indicates a strong appetite for Japanese government bonds, despite global concerns about rising long-term yields and massive budget deficits [2].

Mizuho's chief desk strategist, Shoki Omori, described the auction results as "a remarkably robust outcome ... that likely caught most observers off guard." The strong demand at the auction helped soothe investor nerves following poorly received bond sales last month, which contributed to pushing Japan's longest-dated yields to record peaks [3].

The 10-year yield fall was accompanied by a gain in benchmark 10-year JGB futures, which rose 0.14 yen to 139.16 yen. Additionally, shorter-dated yields also retreated, with the five-year JGB yield dropping 1 bp to 1.02% and the two-year JGB yield remaining flat at 0.75% [3].

Investors are closely watching the upcoming 30-year JGB auction on Thursday, which will test the market's appetite for longer-dated debt. The finance ministry is considering adjustments to issuance plans to address supply-demand imbalances in the super-long bonds sector, as traditional buyers like life insurers show less interest in this segment [2].

The recent developments in the Japanese bond market highlight the transition to normal functioning after years of yields being pinned down by the central bank's large-scale bond purchases. The Bank of Japan is expected to review its bond purchase plan at its June 16-17 policy meeting, potentially slowing the pace of government bond buying next fiscal year [2].

References:
[1] https://economictimes.indiatimes.com/markets/bonds/japanese-government-bond-yields-retreat-after-strong-10-year-note-auction/articleshow/121588526.cms?from=mdr
[2] https://finance.yahoo.com/news/japan-bonds-pass-10-supply-064919888.html
[3] https://www.tradingview.com/news/reuters.com,2025:newsml_L2N3S602P:0-japanese-government-bond-yields-retreat-after-strong-10-year-note-auction/