TOKYO: Yields on 10-year Japanese government bonds sank on Tuesday, reversing an earlier rise, after results of an auction of the securities saw the highest demand since April last year.

The 10-year yield dropped 3 basis points (bps) to 1.475%, as of 0349 GMT, following an earlier rise of as much as 1.5 bps as Japanese yields initially tracked a rise among U.S. peers from overnight.

Benchmark 10-year JGB futures rose 0.15 yen to 139.17 yen.

Two-year JGB yields slipped 0.5 bp to 0.745%.

Other tenors had yet to trade following the announcement of the auction results at 0335 GMT.

Mizuho’s chief desk strategist, Shoki Omori, called the result “a remarkably robust outcome … that likely caught most observers off guard.”

The bid-to-cover ratio, a measure of demand that gauges the number of bids against the amount of securities on offer, rose to 3.663 from 2.544 at the prior sale in May. At the auction last April, the ratio was 3.799.

Reuters