"Timely rain" before the general election! Strong demand for 30-year Japanese government bonds auction eases market selling pressure.

Japanese 30-year government bond auction strong demand, pushing prices higher, easing concerns about the weekend Senate elections. On Thursday, the subscription multiple for the Japanese Ministry of Finance bond auction increased compared to the previous month, causing the 30-year Japanese government bond yield to temporarily drop by 7 basis points to 3.565%. Long-term government bonds were generally supported by buying interest, with the 40-year Japanese government bond yield dropping by 9.5 basis points to 3.845%. In the latest bond issuance, the subscription multiple was 3.64, higher than the previous auction of 3.14 and the 12-month average of 3.35. Kazuya Fujiwara, fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities, said, "Despite concerns about fiscal expansion making purchases before the election somewhat difficult, many investors may still want to buy due to the high yields." Signs indicate that demand may increase after political uncertainty is resolved. Meiji Yasuda Life Insurance Company stated that Japanese ultra-long term government bonds offer attractive investment opportunities, and the company is looking for the right buying opportunity. According to strategists at Mizuho Bank, investors may return to the longer-term Japanese government bond market after the early elections this weekend, and large asset management institutions believe that a 2.5% yield on 10-year Japanese government bonds could be a buying trigger. Jordan Rochester, head of macro strategy at Mizuho Bank in London, said during a recent trip to Tokyo, life insurance companies, asset management companies, and banks almost unanimously agreed that a 2.5% yield on 10-year Japanese government bonds is a good buying opportunity. Currently, the yield is hovering around 2.25%. This auction is the second test this week of investors' demand for long-term bonds. Earlier, investors were cautious about an emergency vote scheduled for Sunday in the Lower House to determine the scale of fiscal spending. The issuance of 10-year Japanese government bonds on Tuesday showed that concerns about increasing fiscal spending persist among investors. Japanese Prime Minister Sanae Takaichi's plan to lower the consumption tax on food led to a surge in Japanese government bond yields last month to historic highs, triggering a sell-off wave that affected global bond markets. Although market pressure has eased somewhat since then, the yield on 30-year Japanese government bonds is still close to its highest level since issuance. At the latest round of bond issuance, there are signs that Sanae Takaichi's public approval rating remains stable, while the new opposition alliance struggles to resonate with voters. Weekend opinion polls show that the ruling party is likely to win an absolute majority in the election. Shoki Omori, chief strategist at Mizuho Securities Tokyo Branch, said, "The outcome can be considered satisfactory. The market has confirmed that, with 30-year Japanese government bond yields at high levels, a certain level of real money demand has responded. Analysts pointed out that Japanese bond traders were pleased to see strong demand for the 30-year Japanese government bond auction, higher than the average for 1-year Japanese government bonds, and more concentrated at the tail end; the lowest transaction price also exceeded expectations, further boosting market confidence. In addition, over 23% of the bonds were purchased by two large local companies, which should help facilitate smooth secondary market trading. The depreciation of the yen still makes investors uneasy, as Sanae Takaichi previously pointed out the benefits of a weaker yen, making the yen a focus once again. Hedge funds are re-shortening the yen, preparing for further weakness in the yen before the weekend vote. Investors are also closely watching how the election results will affect the Bank of Japan's interest rate hike path, as Sanae Takaichi is known for her loose monetary policy. The summary of the Bank of Japan's January meeting showed that as authorities closely monitor the impact of the weak yen on inflation, they are increasingly aware of the need to raise rates in a timely manner.