Japan's 10-Year Debt Auction Sees Smooth Passage at 3% Yield

Japan's 10-year government debt auction went smoothly after yields on the key maturity hit a milestone of 3% on Tuesday. The bid-to-cover ratio at the sale was 3.29, compared to 2.56 at the last auction and a 12-month average of 3.26.

The yield on Japan's 10-year government debt reached a three-decade high of 3% shortly before the auction, ahead of the central bank's September 18 policy decision. Bank of Japan Deputy Governor Ryozo Himino kept the door open to an interest rate hike this month in a speech last week.

'The result was as expected by the market, or perhaps slightly weaker than anticipated,' said Miki Den, senior rates strategist at SMBC Nikko Securities Inc.

Investors are looking for yields above 3% on 10-year JGBs. The auction showed that investors are positioned for a higher interest rate environment, with an increased demand for government debt.