Auctions of government bonds are usually so routine that they generate little attention. But Japan’s sale of 20-year debt last month was an exception.
As financial newswires flashed the dismal results around the world, the prices of the longest dated Japanese sovereign bonds dropped sharply, pushing up yields and increasing borrowing costs. An auction of US 20-year bonds the following day also attracted a lukewarm response.
Close attention to the finer details of government bond auctions and higher yields on longer-dated debt are symptoms of the same thing: wobbling investor appetite for such instruments just at the moment when many finance ministries are planning record levels of issuance, and as the world economy enters a new and uncertain era.