The latest auction of 40-year Japanese sovereign bonds saw the weakest demand since July, pushing the 40-year yield up by 5 basis points to 3.335%.
This isn’t an isolated incident; earlier this month, 30-year and 40-year yields hit record highs after soft demand for 20-year bonds.
This persistent weakness is putting pressure on the Japanese government to reconsider its issuance of super-long bonds. Why the investor reluctance? High volatility and unchanged issuance amounts are making investors wary of taking on additional risk in the JGB market.
Beyond Japan, this trend highlights a growing global concern: rising government spending and budget deficits are impacting long-maturity debt yields worldwide.
#EyeonVolatility
