Japan bond yields retreat; 30-year auction uneventful

Business Recorder reported that Japanese government bond yields retreated on Thursday after several sessions of gains, amid investor reassessment of inflation risks and the chance of a US rate increase. The benchmark 10-year yield dropped 4 basis points to 2.970%. The 30-year auction, however, passed with little drama, as had been expected.

Demand at the 30-year auction, measured by bid-to-cover, reached 3.79 times compared with 3.86 times previously, while the tail rose to 0.28 from 0.21 in August. Following the sale, the 30-year yield held at 4.070%, after a 9.5 bp decline during the day. Takayuki Miyajima, a senior economist at Sony Financial Group, said the result looked softer only against the previous sale and was not weak compared with recent auction averages.

Shorter maturities also moved: the 2-year yield, which tracks Bank of Japan policy rates most closely, eased 0.5 bp to 1.85%, while the 5-year edged down to 2.290%, a drop of 2 bps, and the 20-year slid 8 bps to 3.805%. In the US, Treasury yields pulled back from multi-year highs, and the yen extended its gains after a sharp rise in the prior session.