Japan's 10-year government bond yield dropped 11 basis points to 2.57% after an auction drew firm demand, with a bid-to-cover ratio of 3.53 exceeding the 12-month average of 3.35, Bloomberg News reported on Tuesday, citing senior strategists.
The result provided a soothing sign to watchers of the Japanese government bond market, which had seen yields reach multi-year highs recently on concerns over inflation and fiscal policy stoked by the US-Iran war, the news wire.
Investors are betting that the Bank of Japan may need to raise rates soon to combat inflation and curb the yen's weakness, as the currency edges closer to 160 against the dollar, the publication said.
While yields have eased, oil prices remain elevated as the US struggles to revive peace efforts, and BOJ Governor Ueda has flagged vigilance over oil price spikes on inflation, the report said.
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