Japan's Longest-Dated Debt Attracts Strong Demand Amid Rate Hike Expectations

Japan's 40-year government bond auction saw its strongest demand in six years on September 29, 2026. The auction drew bids equal to 3.1 times the amount offered, with a bid-to-cover ratio that surpassed both the previous sale and the 12-month average.

This surge in demand was partly due to May's reduction in 40-year auction sizes, as well as expectations of more aggressive rate hikes by the Bank of Japan, which helped soothe inflation concerns.