Japan 20-Year Yield Climbs After Soft Auction as BOJ Rate Debate Intensifies

Japan’s Ministry of Finance sold ¥606.1 billion ($4.2 billion) of 20-year government bonds on Tuesday, increasing the offer size from ¥600.4 billion at the previous sale. The average yield jumped to 2.581% from 2.482% and the bid-to-cover ratio slipped to 3.085 from 3.146, signalling softer demand. The tail widened to 2.591%, and the secondary-market yield moved up a further 1.5 basis points to 2.59%. The auction result fed into a broader rise across Japan’s yield curve. Ten-year JGBs were last at 1.585% after gaining as much as 2.5 basis points, while the five-year yield touched 1.13%, its highest level since late July. Investors are reassessing the outlook for Bank of Japan policy after veteran Liberal Democratic Party lawmaker Taro Kono said the central bank should begin raising interest rates soon to curb the weak yen and restore positive real borrowing costs. Similar upward pressure was evident in China, where the 30-year government bond yield climbed 4.4 basis points to 2.038%, extending an earlier move that lifted the rate above 2.02%. The simultaneous rise in long-dated yields across Asia underscores expectations that major central banks in the region may have to follow the global shift toward tighter policy.