Japan 40-year bond sales see better demand than 12-month average

Despite investors' concerns about inflation brought on by the Middle East crisis, demand for Japan's 40-year government bond auction was greater than its 12-month average due to higher yields.

The bid-to-cover ratio was 2.70 in Wednesday's sale, up from 2.54 at the previous auction and 2.47 on average for the previous 12 months. According to a Bloomberg report, the bonds yielded 3.84%, compared to 3.6% in the previous sale and the highest yield estimate of 3.85%.

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The outcome occurred while oil prices continued to rise due to ongoing uncertainty about a possible agreement to reopen the Strait of Hormuz. Just hours after President Donald Trump hinted that talks with Tehran over an interim deal were moving forward, US and Israeli forces attacked Iranian ships in the channel and other targets.

After hitting a record high of 4.355% earlier this month, the 40-year yield was last trading at 4.09%.

Prime Minister Sanae Takaichi's announcement that the government will finance its supplemental budget without raising bond issuance on a calendar-year basis has allayed supply concerns.