The 30-year Japanese government bond yield is being pulled between fiscal concerns and strong auction results.

30-year Japanese government bond market was locked in a tug-of-war on Thursday: on one side, there were lingering concerns about fiscal discipline, on the other side, strong auction results showed steady demand for the country's bonds. The yield on 30-year Japanese government bonds climbed to a new high of 3.445% in early trading, marking the fourth consecutive day of record highs. Later that day, the high yield helped attract steady investor demand for the bonds auctioned by the Ministry of Finance. The bid-to-cover ratio, a measure of bond auction demand, reached its highest level since May 2019. The highest bid yield set a record at 3.434%. The tail spread of this auction was narrower compared to the previous 30-year government bond auction in November, indicating strengthened demand. Despite fiscal concerns, the steady demand highlighted investors' interest in high-yield bonds. Speculation that Japan's Ministry of Finance may reduce the issuance of ultra-long-term bonds in the future also boosted demand.