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Japan’s 10-year Bond sale sees highest demand in 14 monthsJapan’s government bond futures rose 0.12 to 139.14 and 10-year bond yields fell 3 basis points to 1.475%.By Bloomberg  June 3, 2025, 10:01:12 AM IST (Published)2 Min ReadDemand at Japan’s 10-year debt auction rose to the strongest since April 2024 as higher yields attracted investors, helping to soothe the market against a backdrop of rising rates globally.

Japan’s government bond futures rose 0.12 to 139.14 and 10-year bond yields fell 3 basis points to 1.475%. The bid-to-cover ratio at the ¥2.6 trillion ($18 billion) sale increased to 3.66, compared with 2.54 at last month’s auction, higher than the average over the past year.

The auction brought some short-term relief, “but the market may be more concerned about the super-long 30-year auction” on June 5, said Ken Matsumoto, a macro strategist at Credit Agricole in Tokyo.

Confidence in longer-maturity notes globally has been crumbling as investors are concerned about massive budget deficits, which may result in heftier debt loads in some of the world’s biggest economies. On top of that, the Bank of Japan’s pullback from its huge bond purchases has led to a sharp steepening of the nation’s bond curve and heightened worries about government borrowing.

After years of yields being pinned down at artificially low levels by the central bank, the bond market is now experiencing a painful transition to normal functioning. This was laid bare by a lack of demand at Japan’s 20- and 40-year debt sales last month, which triggered a further selloff in sovereign bonds.

There is speculation that the finance ministry may adjust its debt sales after it sent a questionnaire last week to market participants asking their views on issuance and the current market situation. Investors will also be paying close attention to a 30-year bond sale on Thursday after the yield recently hit its highest level since it was first sold.

This week’s auctions also increase the focus on the Bank of Japan’s bond buying plan, which it will review at its June 16-17 policy meeting. Governor Kazuo Ueda has vowed to monitor the impact of rising super-long bond yields on shorter-maturity debt, indicating concern about the issue.

Since last summer, the bank has been reducing its purchases of government bonds by ¥400 billion every quarter, but that process will come to a halt, former BOJ board member Makoto Sakurai said in an interview Monday in Tokyo.Continue ReadingCheck out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!TagsJapan