Demand for Japanese government bond auction hits record high, yen rebounds

1. During Tuesday's Asian trading session, the yen ended its two-day losing streak against the US dollar. As of 15:10, USD/JPY had fallen by 0.27% to 158.05. The bid-to-cover ratio for Japan's 20-year government bond auction reached 5.84 times the issuance volume, significantly higher than last month's 4.01 times. Record demand propelled the yen's appreciation.2. Lu Zhengyan, Senior Fixed Income Strategist at State Street Global Advisors, stated that the record-breaking 20-year Japanese government bond auction strongly indicates that previously sidelined funds are returning.3. He also mentioned that Japanese government bonds are now being viewed as a relative safe haven during periods of political and fiscal turmoil in Europe, especially amid ongoing instability in France. The yen has remained relatively stable against currencies such as the euro and the Swiss franc, showing that higher domestic yields and returning institutional demand are becoming structural supports for Japanese assets. After the auction, the yield on Japan's 20-year government bond fell by 6 basis points to 3.71%.