Japan’s Finance Ministry accepted ¥2.1184 trillion in bids for a two-year government bond on Oct. 29, producing a calculated bid-to-cover ratio of 4.03 ahead of the Bank of Japan’s scheduled policy statement on Oct. 30.
Competitive bids totaled ¥8.5392 trillion. The 4.03 ratio is calculated by dividing that amount by the accepted bids. At the Sept. 30 auction, ¥8.3448 trillion was bid and ¥2.1453 trillion accepted, implying a ratio of 3.89.
The new issue, No. 490, carries a 1.9% coupon and matures Nov. 1, 2028. The ministry reported yields of 1.912% at the lowest accepted price and 1.905% at the weighted-average price.
Yields on Japanese government bonds (JGBs) moved in different directions, Reuters reported at 1:39 a.m. ET (05:39 UTC). The two-year yield was 1.895%, down 0.5 basis point, while the five-year yield was unchanged at 2.265%. The 10-year and 30-year yields each rose 0.5 basis point, to 2.83% and 3.88%. Reuters said the 20-year bond had not traded as of 1:14 a.m. ET (05:14 UTC).
The U.S. Federal Reserve kept its target range at 3.75%-4% on Oct. 28 in a 10-2 vote, with two members favoring a quarter-point increase. Reuters linked the rise in Treasury prices after the announcement to support for Japanese government bonds. It quoted Yuhi Kawano, a market analyst at Mizuho Securities, as saying, “The market seemed to perceive it as less hawkish than expected.”
The BOJ’s September decision set its guideline for the overnight call rate at around 1.25%, effective Sept. 24. The bank said future adjustments would take economic activity, prices and financial conditions into account. Its schedule lists the policy statement and October outlook for Oct. 30, with the release time undecided.
A Reuters poll conducted Oct. 13-19 found that 54 of 78 economists surveyed expected the BOJ’s policy rate to reach 1.5% in the fourth quarter. Of the 54 who named a month, about 80% selected December and 2% chose the October meeting.
