Japan's 10-year yields hit near 5-month low on weak auction demand

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TOKYO — Japan’s 10-year government bond yields fell to near a five-month low on Tuesday, as investors witnessed weaker demand at an auction for bonds with the same maturity.

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The 10-year JGB yield fell to 0.165%, its lowest since March 9, before rising to 0.170%.

The auction received bids worth 3.02 times the amount available, significantly lower than a bid-cover ratio of 5.05 at the previous auction.

“The outcome was weak. The level of yields was low from the beginning. And the yields fell further in early trade,” said a market participant at a domestic brokerage.

“That made investors cautious.”

Benchmark 10-year JGB futures eased early gains after the auction, rising 0.19 point to 150.66, with a trading volume of 15,890 lots.

Yields on longer-ended notes fell sharply, with the 20-year JGB yield dropping 4.5 basis points to 0.815%.

The 30-year JGB yield fell 5.5 basis points to 1.170%. The 40-year JGB yield fell 3 basis points to 1.345%.

The two-and five-year JGBs did not trade and their yields remained at minus 0.090% and minus 0.025%, respectively. (Reporting by Tokyo markets team)