2025-12-25 07:29:08

The latest auction of Japan's two-year government bonds saw an unexpected development—demand plummeted, with a bid-to-cover ratio of only 3.26, well below the average of 3.65 over the past year. What signals might be hidden behind this?

Traders have already provided an answer: the Bank of Japan's pace of interest rate hikes may be more aggressive than most people expected.

The data is clear. The yield on the two-year government bond has soared to its highest level since 1996. The ten-year breakeven inflation rate has even surged to its highest point since 2004. Although recent volatility has eased somewhat, the bond market has already sounded the alarm.

Last week, BOJ Governor Kazuo Ueda pushed the policy rate to a 30-year high, only to be vague about the next steps. This ambiguous stance directly ignited market imagination—the yen depreciated sharply, and yields soared.

The real test is coming. On Friday, the Cabinet will approve the budget for fiscal year 2026, and once the government debt issuance plan is announced, it is likely to stir the bond market again. Has the tightening cycle truly begun? Will Japan become the next epicenter in the global interest rate battle? These questions are being watched with bated breath.

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LuckyBearDrawer

· 6h ago

The Bank of Japan really can't hold on anymore with this move; the market is betting on what it will do next.

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just_another_fish

· 7h ago

The Bank of Japan is at it again, this time playing the game of "hesitation" directly... What does the plunge in bid multiples indicate? Retail investors have long sensed the trend.

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MemeEchoer

· 7h ago

The Bank of Japan is starting to shake things up again. The plunge in bid multiples is becoming more and more common. Ueda's vague remarks have left the market with endless imagination. I bet five bucks that he will be more aggressive. The two-year government bond yield has surged to its highest level since 1996. Isn't that outrageous? It feels like the entire Japanese bond market has exploded. Is a tightening cycle coming? Really or just another market gimmick? The yen's depreciation and yield spike—who can withstand this combination?

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ZenMiner

· 7h ago

The Bank of Japan's recent move is indeed quite aggressive. The market's reaction is so strong, it shows that some people are really panicking. The bid multiple has dropped to 3.26, which is just messing around.

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