The 20-year yield lost 4.5 bps to 3.135% and the 10-year yield fell 2 bps to 2.225%.
Bond yields fall as prices rise.
Mizuho Securities strategists said in a note ahead of the auction that “significantly” higher yields compared to the previous auction a month earlier were likely to attract buyers.
The 30-year rate was closer to 3.5% at the time of the January 8 sell-off.
So-called super-long bonds have been particularly sensitive to a perceived loosening of fiscal discipline by Prime Minister Sanae Takaichi, an acolyte of former Prime Minister Shinzo Abe’s “Abenomics” policies, with Japan already the most indebted country in the developed world. triggered by Takaichi’s promise to waive food sales taxes for two years when she called for early elections.
Takaichi’s Liberal Democratic Party could win as many as 300 seats in the 465-seat lower house, recent newspaper polls showed.
“As uncertainty over fiscal policy is expected to persist until specific policy details are announced well after the election results are announced, a sharp decline in interest rates is unlikely in the near term,” Mizuho Securities analysts said.
Shorter-dated yields moved in the opposite direction on Thursday as they are more closely linked to monetary policy expectations than budget concerns, with Bank of Japan officials recently being more hawkish.
The two-year yield added 1.28% by 1 bp, while the five-year yield rose 0.5 bp to 1.68%.
AgenciesYields on Japanese government bonds have risen, with the 10-year yield hovering around a 17-year high of 1.675%. Japan’s enormous public debt, which now stands at around 216% of GDP, is causing budgetary problems and reducing the scope for bold stimulus measures. Analysts expect Takaichi to pursue mildly pro-growth policies while remaining conservative on fiscal expansion. (Disclaimer: This slideshow is courtesy of Reuters)
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