The two-year bond auction conducted by the Ministry of Finance on the 29th produced a strong result, attracting investor demand. With the Bank of Japan meeting results due to be announced the following day, the bond market is also pricing in further rate hikes.
The two-year bond auction conducted by the Ministry of Finance on the 29th attracted strong demand, particularly from domestic investors. As in July, there was also concern that the auction would be cautious because it took place ahead of the announcement of the Bank of Japan monetary policy meeting results.
The view is spreading in the market that the Bank of Japan's terminal policy rate is settling at 1.75-2.00%, and there is speculation that rate hikes are increasingly being priced into the bond market.
This movement is being affected by the close timing of fiscal and monetary events and may fluctuate depending on future auction trends and the timing of the meeting results announcement.