Japan to auction 5-year government bonds for the first time since Prime Minister Suga announced his resignation, testing market interest.

Japan will hold a 5-year government bond auction on Wednesday, marking the first test of market interest in new bonds since Prime Minister Shido Mao announced his resignation. Due to domestic political uncertainty and heightened debate over whether the Bank of Japan will slow down its rate hikes, investors expect moderate demand for government bonds. The yield on the 5-year government bond, which is sensitive to monetary policy expectations, was reported at 1.095% on Tuesday, close to its lowest level since mid-August. "The auction of 5-year bonds may produce a safe result," said Naomi Muguruma, Chief Bond Strategist at Mitsubishi UFJ Morgan Stanley Securities. "Demand for short-term and medium-term bonds should remain strong for the time being."