Japan is set to auction 10-year government bonds on Thursday, just ahead of the ruling party’s leadership vote that will shape fiscal and economic policy. Market nerves are high with yields near their highest since 2008, as speculation builds that the Bank of Japan could raise rates in October.
A weak two-year bond sale earlier this week underscored investor caution, while demand for ultra-long 40-year debt remained solid. Traders will focus on the bid-to-cover ratio for the 10-year auction, which was strong at the last sale. Markets now price a 58% chance of an October rate hike, supported by firmer business sentiment in the latest Tankan survey.
Auction results are expected around 12.35pm Japan time:
- 0325 GMT
- 2335 US Eastern time
