Demand at Japan's 30-year government bond auction was weak, below the 12-month
average, as global fiscal-policy concerns damped bids. The bid-cover ratio was
3.36 on Tuesday, down from 3.88 at the prior auction and below the 12-month
average of 3.6. A recent 10-year JGB auction also showed soft demand after
yields fell, reducing investor interest. A global bond rally last week,
including US Treasuries and JGBs, following a US midterm-driven tech selloff,
pushed investors into safe havens and sent Japanese yields sharply lower from
earlier multi-decade highs. The yield decline raises questions over whether
current levels will attract buyers for ultra-long JGBs; market focus is on
overall rate direction and the Bank of Japan's December meeting. Swap-market
pricing implies roughly a 77% probability of a Bank of Japan rate hike in
December.
