Japan Five-Year Bond Auction Sees Weakest Demand Since 2020 as Yen Slides

Japan’s Ministry of Finance drew the weakest demand for five-year government bonds in five years, according to results published after Wednesday’s auction. The bid-to-cover ratio fell below the 12-month average and marked the lowest reading since 2020, underscoring investors’ concerns about deteriorating liquidity and heightened volatility in the nation’s sovereign debt market. The soft auction coincided with renewed pressure on the currency. The yen weakened past ¥148 per dollar while the euro advanced to about ¥173, extending recent losses amid uncertainty over the Bank of Japan’s next policy move and ebbing demand for traditional safe havens. Traders said the tepid appetite for short-dated paper highlighted broader skepticism around Japan’s bond market just as speculation grows that the BOJ could delay additional rate increases.