Japan’s government bond auctions, once viewed as predictable and procedural, have been reborn as a barometer of stress in the nation’s debt market — and a trigger for moves in yields from Europe to the US.
The global importance of auctions in Tokyo has been on show since a sale of 20-year securities last month caught investors off guard when a key measure of demand fell to the lowest level in more than a decade.
This sparked a selloff in Japanese bonds in the secondary market that pushed yields on some super-long debt to the highest on record and rippled through to German bunds and US Treasuries.
With two or even three auctions taking place many weeks, the potential for market volatility is growing as investors around the world question governments over their heavy debt loads.
Here is a guide to understanding the intricacies of Japanese bond auctions:
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