logo
Japan's 20-year bond auction gets weakest demand since 2012

Japan's 20-year bond auction gets weakest demand since 2012

Business Times20-05-2025

[TOKYO] Japan's auction of 20-year bonds got the lowest demand since 2012, pointing to market concern about who will buy as the Bank of Japan (BOJ) dials back its huge debt holdings.
The average bid-to-cover ratio was 2.5 at the Ministry of Finance's one trillion yen (S$8.9 billion) sale of March 2045 bonds, the lowest since August 2012, compared with 2.96 in the last auction. In another sign of sluggish demand, the tail, or the gap between average and lowest-accepted prices, came in at 1.14, the biggest since 1987.
Japanese bond futures plunged, and the benchmark 10-year yield rose to 1.525 per cent, the highest since late March.
The BOJ will sound out market participants this week to gauge their views on how aggressively it should proceed with quantitative tightening as yields increased sharply nearly a year after it began scaling back its huge bond purchases. Even though foreigners bought record amounts of super-long Japanese bonds in April, their presence in the market is still small.
'The results were even worse than I had expected,' said Katsutoshi Inadome, a senior strategist at Sumitomo Mitsui Trust Asset Management. 'Thirty- and 40-year bonds were being sold due to fiscal expansion risks and declining liquidity, but deteriorating market conditions have now spread to 20-year bonds, which had been relatively stable.'
The sale comes after a recent surge in longer Japanese bond yields and increased volatility owing in part to US President Donald Trump's policy measures. Traders are also focusing on how the US downgrade by Moody's Ratings last week may also affect Japan's fiscal policy debate. BLOOMBERG

Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Trump tariffs may remain in effect while appeals proceed, US appeals court rules, World News
Trump tariffs may remain in effect while appeals proceed, US appeals court rules, World News

AsiaOne

timean hour ago

  • AsiaOne

Trump tariffs may remain in effect while appeals proceed, US appeals court rules, World News

A federal appeals court allowed President Donald Trump's most sweeping tariffs to remain in effect on Tuesday (June 10) while it reviews a lower-court decision blocking them on grounds that he had exceeded his authority by imposing them. The decision by the US Court of Appeals for the Federal Circuit in Washington, DC means Trump may continue to enforce, for now, his "Liberation Day" tariffs on imports from most US trading partners, as well as a separate set of tariffs levied on Canada, China and Mexico. The appeals court has yet to rule on whether the tariffs are permissible under an emergency economic powers act that Trump cited to justify them, but it allowed the duties to remain in place while the appeals play out. The Federal Circuit said the litigation raised issues of "exceptional importance" warranting the court to take the rare step of having the 11-member court hear the appeal, rather than have it go before a three-judge panel first. It scheduled arguments for July 31. The tariffs, used by Trump as negotiating leverage with US trading partners, and their on-again, off-again nature, have shocked markets and whipsawed companies of all sizes as they seek to manage supply chains, production, staffing and prices. The ruling has no impact on other tariffs levied under more traditional legal authority, such as duties on steel and aluminium imports. A three-judge panel of the US Court of International Trade ruled on May 28 that the US Constitution gave Congress, not the president, the power to levy taxes and tariffs, and that the president had exceeded his authority by invoking the International Emergency Economic Powers Act, a law intended to address "unusual and extraordinary" threats during national emergencies. The Trump administration quickly appealed the ruling, and the Federal Circuit in Washington put the lower court decision on hold the next day while it considered whether to impose a longer-term pause. The May 28 ruling came in a pair of lawsuits, one filed by the nonpartisan Liberty Justice Centre on behalf of five small US businesses that import goods from countries targeted by the duties, and the other by 12 US states led by Oregon. Jeffrey Schwab, an attorney for the small businesses that sued, said Tuesday's federal appeals court decision was disappointing, but it did not mean that the Trump administration would win in the end. "It's important to note that every court to rule on the merits so far has found these tariffs unlawful, and we have faith that this court will likewise see what is plain as day: that IEEPA does not allow the president to impose whatever tax he wants whenever he wants," Schwab said Tuesday. The White House and state of Oregon did not immediately respond to requests for comment after normal business hours on Tuesday. Trump has claimed broad authority to set tariffs under IEEPA. The 1977 law has historically been used to impose sanctions on enemies of the US or freeze their assets. Trump is the first US president to use it to impose tariffs. Trump has said that the tariffs imposed in February on Canada, China and Mexico were to fight illegal fentanyl trafficking at US borders, denied by the three countries, and that the across-the-board tariffs on all US trading partners imposed in April were a response to the US trade deficit. The states and small businesses had argued the tariffs were not a legal or appropriate way to address those matters, and the small businesses argued that the decades-long US practice of buying more goods than it exports does not qualify as an emergency that would trigger IEEPA. At least five other court cases have challenged the tariffs justified under the emergency economic powers act, including other small businesses and the state of California. One of those cases, in federal court in Washington, DC, also resulted in an initial ruling against the tariffs, and no court has yet backed the unlimited emergency tariff authority Trump has claimed. [[nid:718640]]

Asian markets rally after China-US framework on trade
Asian markets rally after China-US framework on trade

CNA

time2 hours ago

  • CNA

Asian markets rally after China-US framework on trade

HONG KONG: Asian stocks rose on Wednesday (Jun 11) as investors welcomed a China-United States agreement to lower trade tensions that stoked hopes the economic superpowers will eventually reach a broader tariff deal. After two days of high-profile, closely watched talks in London, the two sides said they had set up a framework to move towards a pact, following negotiations in Geneva last month that saw them slash tit-for-tat levies. The news provided some much-needed relief to markets after US President Donald Trump accused Beijing of violating that deal. The latest round of talks followed a phone call between Trump and his Chinese counterpart Xi Jinping on Thursday. As well as tariffs, a key issue in the discussions was China's export of earth minerals and magnets used in a range of things, including smartphones and electric vehicle batteries, while Beijing was keen to see an easing of restrictions on its access to tech goods. US Commerce Secretary Howard Lutnick said he was upbeat that concerns over rare earths "will be resolved" eventually, as the agreement is implemented. Xi and Trump must approve the framework first. "We're moving as quickly as we can," US Trade Representative Jamieson Greer told reporters. "We would very much like to find an agreement that makes sense for both countries," he added. "We feel positive about engaging with the Chinese." Speaking separately to reporters, China International Trade Representative Li Chenggang expressed hope that progress made in London would help to boost trust on both sides. The deal, which was reached late on Tuesday, boosted Asian markets with Hong Kong and Shanghai among the best performers, while Tokyo, Sydney, Seoul, Wellington, Taipei and Manila were also up. However, analysts said investors would be keen to get a closer look at the details of the agreement. "The US-China trade circus wrapped with what can only be described as a diplomatic tautology," said Stephen Innes at SPI Asset Management. He called it "a late-night announcement that both sides have 'agreed in principle on a framework to implement the Geneva consensus' - a consensus that was ... already agreed upon weeks ago". And he warned that markets could run out of steam if nothing concrete came through. "If the next headline doesn't come with something tangible, such as cargo ships loaded with rare earths or an actual rollback of tariffs, expect risk assets to start demanding more photo opportunities," he wrote. "Until then, this rally relies on faith." And Saxo chief investment strategist Charu Chanana said before the deal was announced that while there was some hope for the talks, "the era of easy wins - tariff pauses and minor concessions - is over". "What's left are deeper, more entrenched challenges: tech restrictions, rare earth supply chains, student visas, and national security-linked concerns. These are strategic disputes, unlikely to be resolved in a few rounds of meetings." Still, she did say that "trade uncertainty has clearly faded since the peak chaos of early April", when Trump unleashed a tariff blitz that hammered worldwide stock and bond markets. Tuesday's news also overshadowed the World Bank's slashing of its 2025 forecast for global economic growth to 2.3 per cent, from the 2.7 per cent predicted in January, citing trade tensions and policy uncertainty. It also said the US economy would expand 1.4 per cent this year, half of its 2024 expansion.

Five nations and EU urge Trump not to impose new airplane tariffs
Five nations and EU urge Trump not to impose new airplane tariffs

Straits Times

time2 hours ago

  • Straits Times

Five nations and EU urge Trump not to impose new airplane tariffs

President Donald Trump has already imposed tariffs of 10 per cent on nearly all airplane and parts imports. PHOTO: REUTERS Five nations and EU urge Trump not to impose new airplane tariffs WASHINGTON - Five nations and the European Union, as well as airlines and aerospace firms worldwide, urged the Trump administration not to impose new national security tariffs on imported commercial planes and parts, documents released on June 10 showed. Airlines and planemakers have been lobbying President Donald Trump to restore the tariff-free regime under the 1979 Civil Aircraft Agreement that has yielded an annual trade surplus of US$75 billion (S$96.5 billion) for the US industry. The documents made public by the US Commerce Department bared concerns over the fallout of possible new tariffs expressed by companies as well as nations such as Canada, China, Japan, Mexico and Switzerland, besides the European Union. 'As reliable trading partners, the European Union and United States should strengthen their trade regarding aircraft and aircraft parts, rather than hinder it by imposing trade restrictions,' the EU wrote. It would consider its options 'to ensure a level playing field', it added. Mr Trump has already imposed tariffs of 10 per cent on nearly all airplane and parts imports. 'No country or region should attempt to support the development of its domestic aircraft manufacturing industry by suppressing foreign competitors,' the Chinese government wrote. Separately, US planemaker Boeing cited a recent trade deal unveiled in May with Britain that ensures tariff-free treatment for airplanes and parts. 'The United States should ensure duty-free treatment for commercial aircraft and their parts in any negotiated trade agreement, similar to its efforts with the United Kingdom,' Boeing told the Commerce Department in a filing. Mexico said in 2024 it exported US$1.45 billion in aircraft parts, just a tenth of the total, to the United States. The EU said it took US exports of aircraft worth roughly US$12 billion, while exporting about US$8 billion of aircraft to the US. In early May, the Commerce Department launched a 'Section 232' national security investigation into imports of commercial aircraft, jet engines and parts that could form the basis for even higher tariffs on such imports. Last week, Delta Air Lines and major trade groups warned of tariffs' impact on ticket prices, aviation safety and supply chains. 'Current US tariffs on aviation are putting domestic production of commercial aircraft at risk,' Airbus Americas CEO Robin Hayes said in a filing. 'It is not realistic or sensible today to create a 100 per cent domestic supply chain in any country.' Boeing said it had been increasing US content in its airplanes over the last decade and its newest airplanes, the 737 MAX 10 and 777X, would have 'more than 88 per cent domestically-sourced content'. The United Auto Workers union, which represents 10,000 aerospace workers, said it supports tariffs and domestic production quotas, adding that US aerospace employment has fallen to 510,000 in 2024 from 850,000 in 1990. 'To safeguard the entire aerospace supply chain across the commercial and defense sectors, comprehensive tariffs and production quotas on several products are needed,' it said. JetBlue Airways opposed new tariffs, however, saying, 'Trade policy should reinforce, not destabilise, the proven systems that keep our aircraft flying safely and affordably.' REUTERS Join ST's Telegram channel and get the latest breaking news delivered to you.

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into the world of global news and events? Download our app today from your preferred app store and start exploring.
app-storeplay-store