Japanese bond yields rise after poor results from the 20-year government bond auction.

Jin10 data reported on May 20th, Japanese government bond yields jumped on Tuesday as investors sold government bonds following concerns over demand for ultra-long bonds triggered by poor results in the 20-year Japanese bond auction. After the Japanese Ministry of Finance announced the auction results earlier in the afternoon in Tokyo, the yield on 10-year Japanese government bonds surged by 4.5 basis points to 1.525%, the highest level since March 28. The yield on 40-year Japanese bonds rose by 10 basis points to 3.55%, the highest level since the issuance of bonds of that duration in 2007. Mizuho strategist Shoki Omori stated, “The poor auction results highlight the ongoing supply-demand weakness in the ultra-long bond sector, increasing concerns about who will step in to buy. Brokerages and investors appear unwilling to hold existing bonds, which increases the likelihood of a sell-off spiral, extending the sell-off from the 20-year bonds to the 10-year and 30-year markets.”