Japan’s 40-year government bond auction sees strongest demand since 2020
On September 29, Japan's 40-year government bond auction drew the strongest demand since 2020 as relatively high yields attracted investors. The bid-to-cover ratio for this auction was 3.1, up from 2.82 in the previous auction and above the 12-month average of 2.67. Japanese government bond futures continued to rise after the auction. The 40-year bond yield was last reported at 4.23%. The debt sale comes amid growing investor concerns that the Bank of Japan may be falling behind the curve on monetary tightening. BOJ Governor Kazuo Ueda did not provide clear guidance on the pace of future rate hikes after the widely expected increase earlier this month, intensifying expectations that the central bank may ultimately need to raise rates more aggressively.
Japan's 40-year auction drew strongest demand since 2020 as yields attract buyers, but the backdrop is growing conviction the BOJ is behind the curve, with Ueda offering no clear hiking guidance. That raises odds of more aggressive BOJ hikes, which could strengthen the yen, unwind carry trades, and tighten global liquidity—pressuring risk assets including crypto. Short-term bearish (medium).