Key Facts
• On August 26, Japan’s 10-year bond yield rose 0.5 basis points to 1.62%.
• This marks the highest level since October 2008.
• U.S. long-term yields climbed to approximately 4.29%, driving Japanese bond sell-offs.
• Liquidity auction for bonds with 15.5–39 years maturity showed:
– Maximum yield spread: 0.014%
– Average yield spread: 0.005%
– Bid-to-cover ratio: 2.73 (up from 1.99 previously).
• Market reaction to the auction was limited, deemed “stable” by strategists.
• September bond futures fell by ¥0.11 to ¥137.39 in afternoon trading.
• Yield data as of 12:43 PM:
| Maturity | Offer (%) | Bid (%) | Change (%) |
|---|---|---|---|
| 2 years | 0.865 | 0.873 | +0.003 |
| 5 years | 1.155 | 1.163 | +0.007 |
| 10 years | 1.616 | 1.623 | +0.004 |
| 20 years | 2.647 | 2.659 | +0.009 |
| 30 years | 3.208 | 3.222 | +0.007 |
| 40 years | 3.44 | 3.45 | +0.006 |
Summary
Japan’s 10-year bond yield reached 1.62% on August 26, the highest since 2008, driven by rising U.S. long-term yields. A liquidity auction for ultra-long-term bonds showed stable results, with a bid-to-cover ratio of 2.73, up from 1.99. Market reaction was muted, with strategists describing the outcome as “stable.” Bond futures continued to weaken, with September contracts trading at ¥137.39. Yield data across various maturities showed slight increases, reflecting broader market trends.
