Japan’s 10-year government bond yield edged down to around 3.08% on Tuesday, easing from 30-year highs after the latest 40-year bond auction attracted its strongest demand since 2020 amid elevated yields. The bid-to-cover ratio climbed to 3.1, up from 2.82 at the previous auction and above the 12‑month average of 2.67. Japan’s 40-year yield traded above 4.2%.
Even with the pullback, domestic yields remained near multi-decade highs, as persistent concerns over energy-driven inflation reinforced expectations that the Bank of Japan may accelerate the pace of monetary tightening. Oil prices extended their gains after Iranian officials reportedly cast doubt on the likelihood of reaching an agreement before the US midterm elections in November, following President Donald Trump’s rejection of Tehran’s latest proposal. Meanwhile, a former BOJ official said the central bank could raise its benchmark interest rate for a second consecutive month at its October meeting, citing elevated inflation risks.
