Latest news with #TakashiFujiwara
Japan Times
2 days ago
- Business
- Japan Times
Pressure mounts for Japan to adjust bond sales as soon as July
Expectations in the market are intensifying that the government may adjust debt issuance as soon as next month by increasing sales of shorter maturity securities and trimming offerings of longer-dated ones. Japan's yields are hovering at historical highs after a series of auctions in recent weeks that saw poor demand. Thursday's 30-year bond sale saw its weakest demand ratio since 2023 but yields fell as markets began pricing in expectations the Finance Ministry may cut issuance to cap the recent surge in longer-term debt yields. "The forward-looking attitude that the Finance Ministry is moving toward reducing issuance helped out the auction results and led to the buying of bonds,' said Takashi Fujiwara, chief fund manager at Resona Asset Management in Tokyo. "But if the Finance Ministry's issuance reduction is disappointing, selling pressure may increase again from July.' Long-term borrowing costs are surging across the globe amid growing concerns over widening government budget deficits. Recent auctions of longer-maturity debt in Japan have drawn tepid demand, ramping up pressure on the government to rethink issuance plans at a time when the central bank is reining in its massive bond purchases. The timing coincides with the U.S. Treasury Department's call to the Bank of Japan to raise interest rates to strengthen the yen. The BOJ holds its next policy meeting on June 16-17, when the board is widely expected to keep the benchmark rate unchanged. Speculation that the finance ministry may adjust issuance increased after it sent a questionnaire to market participants last week that asked for their views on issuance and the current market situation. The Finance Ministry is set to meet with primary dealers on June 20, according to people familiar with the matter, just days after the BOJ also reviews its bond buying plans. "We see room for the central bank to reduce bond buying in the 10-year and below segments and either increase or maintain the size of its bond buying at the super-long segment to boost investor confidence,' said Justin Heng, HSBC's APAC rates strategist, in a note. "We think that some optimism is emerging in the bond market, as super-long bonds have been resilient, despite a weak 30-year JGB auction.' The 30-year bond yield fell half a basis point to 2.88% on Friday, down from a peak of 3.185% struck last month, the highest level since it was sold. The 40-year bond yield fell 1.5 basis points to 3.055%, and the 20-year rate dropped 2 basis points to 2.335%. "If the Finance Ministry doesn't deliver meaningfully on those expectations, markets could test the upper bound of yields again,' said Charu Chanana, chief investment strategist at Saxo Markets. To be sure, reshuffling the bond maturity mix won't solve Japan's huge debt load, which is the heaviest among major developed countries. As interest rates rise, it may also lead to rollover risk and increase the government's financing costs. Resona Asset Management's Fujiwara said that the market is hoping for an issuance reduction for super-long bonds of around ¥450 billion per sale, or at least ¥300 to ¥400 billion. JPMorgan Securities Japan also said in a report this week that attention will focus on the change in issuance plans, and they estimate that the issuance of super-long bonds will be reduced by ¥250 to ¥450 billion per month from July. "If the size of the issuance reduction is only about ¥100 billion for the 20-year, 30-year and 40-year bonds, the sense of disappointment is likely to intensify,' said Fujiwara.
Yahoo
3 days ago
- Business
- Yahoo
Japanese Bonds Rise as 30-Year Auction Brings Some Relief
(Bloomberg) -- Japanese government bonds rose after an auction of 30-year debt wasn't as bad as many investors had feared. ICE Moves to DNA-Test Families Targeted for Deportation with New Contract The Global Struggle to Build Safer Cars NYC Residents Want Safer Streets, Cheaper Housing, Survey Says The Buffalo Architect Fighting for Women in Design While immediate market reaction indicated relief — yields edged lower after the sale — the bid-to-cover ratio of 2.92 at Thursday's offering points to a general lack of appetite for longer-maturity debt that is afflicting markets from Japan to Europe and the US. Several auctions of longer tenor Japanese bonds in recent weeks have met shaky demand, with the market flashing a warning that authorities in Tokyo may need to reconsider their issuance plans. The Ministry of Finance is set to meet with primary dealers on June 20, according to people familiar with the matter, just days after the Bank of Japan reviews its bond buying plans. 'The forward-looking attitude that the MOF is moving toward reducing issuance helped out the auction results,' said Takashi Fujiwara, chief fund manager at Resona Asset Management Co. in Tokyo. 'On the other hand, I don't think that supply and demand concerns for super-long bonds have peaked yet.' The 30-year bond extended an earlier gain, with the yield falling seven basis points to 2.875% at one point. The 40-year rate dropped as much as 8.5 basis points to 3.055%. 'With all this talk of issuance cuts, investors see little urgency in establishing large positions in super-long bonds until the Ministry of Finance clarifies its next steps,' said Shoki Omori, chief desk strategist at Mizuho Securities Co. 'The market appears poised for a period of watchful waiting.' Omori added that it seems some people failed to cover short positions going into the auction. What Bloomberg Strategists Say... This price action suggests bond traders were using the contract to pre-hedge the debt sale in case it went as badly as the recent 20-year sale. Traders will be relieved there are not any more long-term auctions to navigate before the BOJ meeting in less than two weeks. — Mark Cranfield, Markets Live strategist. Read more on MLIV. Japanese bonds have seen some relief this week after decent demand at a sale of 10-year notes on Tuesday, and after a rally in the US Treasury market Thursday on soft US economic data. Yields on 30-year Japanese bonds have come down from 3.185% last month, the most since inception. There are indications that the recent rout has pushed rates to attractive levels for some buyers. Investors can pick up bargains in Japanese government bonds despite a wave of recent selling that has spread volatility throughout global debt markets, according to Pacific Investment Management Co. Still, the auction results show how the bond market is concerned that the government's borrowing plans may not be sustainable as the central bank reduces its footprint in the market. Governor Kazuo Ueda hinted at the likelihood that the Bank of Japan will continue to slow the pace of government bond purchases next fiscal year, meaning that the board meeting on June 16-17 will be closely watched. Miki Den, a senior rates strategist at SMBC Nikko Securities Inc. in Tokyo, said 'supply-demand concerns will linger' until the MOF's meeting with primary dealers a few days later. 'I expect super-long term yields to remain flat or rise slightly,' he said. The bid-to-cover ratio at the sale was lower than 3.07 the previous month, and the 12-month average of 3.39. The lowest price was below that of a Bloomberg survey. 'The auction wasn't good, but within the acceptable range,' said Masayuki Koguchi, executive chief fund manager at Mitsubishi UFJ Asset Management Co. The tail, or the gap between average and lowest-accepted prices, came in at 0.49, indicating weaker demand than at the prior auction. However, it was still shorter than at April's bond sale, which was seen as positive by the market, said Koguchi. --With assistance from Masahiro Hidaka, Masaki Kondo and Hidenori Yamanaka. (Updates with comment in fourth paragraph.) Cavs Owner Dan Gilbert Wants to Donate His Billions—and Walk Again YouTube Is Swallowing TV Whole, and It's Coming for the Sitcom Millions of Americans Are Obsessed With This Japanese Barbecue Sauce Is Elon Musk's Political Capital Spent? Trump Considers Deporting Migrants to Rwanda After the UK Decides Not To ©2025 Bloomberg L.P. Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Mint
4 days ago
- Business
- Mint
Japanese Bonds Back on Stage With Another Sale of Longer Debt
Japan's sovereign debt is back in the spotlight as the government prepares for another sale of super-long-term bonds after dismal showings at recent auctions, as demand for the far-end of the curve sputters across the globe. The results from the finance ministry's auction of 30-year bonds are due at 12:35 p.m. Tokyo time. The 30-year yield was at 2.945% ahead of Thursday's sale, down from 3.185% last month, the highest level since it was first sold. Some investors are concerned that yields may surge again if the 30-year bond sale sees little demand. Disappointing demand at sales of 20-year and 40-year bonds late last month exposed investor concern about a lack of appetite for longer tenors, sending a fresh warning to the government that it may need to rethink issuance plans. Although a 10-year auction this week brought some relief for the Japanese market, expanding deficits are putting longer bonds under pressure worldwide. 'A weaker-than-expected result in the 30-year auction would risk an upward swing in super-long yields, and the 10-year yield may also be pushed up significantly,' said Hiroshi Namioka, a fund manager at T&D Asset Management Co. Following the jump in long-term yields, Japan's finance ministry sent out a questionnaire to market participants that asked for their views on issuance and the current market situation, signaling that it may be preparing to adjust debt issuance. A draft of the government's annual fiscal policy plan seen by Bloomberg also emphasized the need for more domestic buying of Japanese government bonds. 'There is an expectation of issuance reduction by the MOF, so I don't think the 30-year auction will be as terrible as some of the recent sales,' said Takashi Fujiwara, chief fund manager at Resona Asset Management Co. in Tokyo. 'But it's also true that we still have to be a bit cautious.' With assistance from Masaki Kondo and Naoto Hosoda. This article was generated from an automated news agency feed without modifications to text.
