The Japanese government bond tender At 10 years he achieved a solid reception by the market, which generates transitory relief while investors prepare for a new auction in less than two days, which will test the interest in longer maturities titles.
Government bond futures slightly advanced up to 139.15 at 15:45 in Tokyo, driven by a rebound in the demand indicator of the placement of Tuesday, which reached its highest level since April 2024. In parallel, the performance of the 10 -year bonds descended 2.5 basic points, located at 1.48%. However, caution persists, since on Thursday the market must digest a 30 -year bond issuance in an international context marked by the increase in long -term yields.
“It was a good auction, since the 1.5% yield was attractive to buyers,” said Miki Den, a senior strata of rates at SMBC Nikko Securities cited by the Bloomberg agency. “This gives some support to the market, but does not imply that the yields are going to lower drastically,” he warned, pointing out the proximity of the tender to 30 years.
Given this panorama, and according to a draft of its annual fiscal plan cited by the aforementioned news agency, the Japanese government seeks to promote a greater participation of local investors in the public debt market.
The pressure on the Japanese bonds intensified due to the lack of clarity with respect to who will assume the role of a buyer in replacement of the Bank of Japan, which continues to reduce its balance. Speaking to Parliament, Governor Kazuo Ueda suggested that the entity could maintain the course of gradually cutting its acquisitions during the next fiscal year. The future of the purchasing program will be evaluated at the Monetary Policy Meeting of June 16 and 17.
The market is going through an adjustment stage after years of intervention from the Central Bank, in which the yields were artificially contained. The little demand at debt auctions at 20 and 40 years of the month reflected the difficulties of this transition towards more normal conditions.
Investors will be especially attentive to the placement of bonds at 30 years, after the performance of that section reached a peak of 3.185%, the highest level since they began to be emitted. This Tuesday afternoon in Tokyo, the performance of these titles rose half a basic point, located at 2,935%.
Since the middle of last year, the Bank of Japan has been cutting its quarterly purchases of government bonds at ¥ 400,000 million (about 2.8 billion dollars). However, this process could be coming to an end, according to the former member of the Makoto Sakurai Board of Directors on Monday in Tokyo.
In parallel, versions on a possible adjustment in the emission calendar of the Ministry of Finance increase. Last week, the portfolio sent a questionnaire to market actors to know their vision about current conditions and future placements.
The ¥ 2.6 billion auction in 10 -year bonds recorded a solid 3.66 coverage ratio, compared to 2.54 of the previous month and above the average of the last twelve months.
“Uncertainty will not disappear immediately, especially with the 30 -year auction so close, but this result is undoubtedly a good sign,” Inadome concluded.
Source: Ambito
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