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Japanese longer-dated bonds rallied on Tuesday after the government took the rare step of canvassing primary dealers and other market participants for their views on future issuance.
The move by the Japanese finance ministry appeared designed to restore calm to a JGB market that has been wracked by volatility in recent weeks, with borrowing costs rising to record highs last week.
The yield on the 30-year Japanese government bond fell 0.19 percentage points to 2.85 per cent, while the 10-year yield dropped 0.04 percentage points to 1.46 per cent. Yields move inversely to bond prices.
The questionnaire was sent to a wide range of primary brokers, according to two people familiar with the situation, and sought comments on the current market situation.
It appeared designed, said both people, to confirm that demand for super long-dated JGBs was structurally low, potentially justifying a government decision to pull back on issuance.
Analysts at MUFG noted that the move by the MoF “may well reflect increased concerns over yields following the poor 20-year auction last week and ahead of a 40-year bond auction tomorrow”.
US government bonds also rallied on Tuesday, with the 30-year Treasury yield down 0.07 percentage points to 4.96 per cent.
https://www.ft.com/content/7b04f2e5-170f-4e06-bb26-bf16ec2506f5
