Japan’s Two-Year Bond Auction Draws Strongest Demand Since October

Japan’s Ministry of Finance sold about ¥1.98 trillion ($12.7 billion) of two-year government bonds on Tuesday, attracting the strongest demand since October. The auction drew a bid-to-cover ratio of 4.47, indicating investors submitted more than four times the amount of securities on offer. The robust appetite came as the average yield rose to 0.841%, the highest level for the tenor since 2008, while the tail yield widened to 0.844%. Analysts said the higher yields, which reflect expectations that the Bank of Japan will gradually normalise policy, are luring buyers back to the short end of the JGB curve.