Core Viewpoint - Despite ongoing fiscal concerns in Japan, strong demand for 30-year government bonds has been observed, marking the highest demand since 2019 [1] Group 1: Bond Auction Results - The bid-to-cover ratio for the 30-year bond auction reached 4.04, significantly higher than November's 3.125 and the average of 3.35 over the past 12 months [1] - The tail difference narrowed to 0.09, down from 0.27 last month, indicating more concentrated bidding and stable demand [1] Group 2: Yield Trends - The yield on the 10-year benchmark government bond reached 1.91%, the highest level since 2007 [1] - The yield on the 30-year government bond rose by 2.5 basis points to 3.445%, the highest since its introduction in 1999 [1] Group 3: Interest Rate Expectations - Market expectations for a rate hike by the Bank of Japan have surged, with an 80% probability for a December 19 meeting increase and over 90% for January [4] - The probability for a December rate hike was only 56% a week prior [4] Group 4: Government Bond Issuance Plans - Investors are closely monitoring the government's budget details for the next fiscal year, particularly regarding potential reductions in long-term bond issuance [6][7] - The Japanese Finance Ministry plans to increase short-term bond issuance by 300 billion yen (approximately 1.93 billion USD) to fund economic stimulus measures [7] Group 5: Hawkish Signals from the Central Bank - The hawkish remarks from Bank of Japan Governor Kazuo Ueda have significantly heightened market rate hike expectations [8] - Ueda's comments about the upcoming monetary policy meeting were described as an unusually strong signal [8] Group 6: Economic Outlook - Ueda expressed growing confidence in the economic outlook, suggesting that conditions for policy normalization are improving [9] - He noted that despite recent negative GDP data, the economy is still on a moderate recovery path [9] - Ueda indicated that wage growth is showing initial momentum, which could support a shift away from negative interest rates [10]

Core Viewpoint - The Japanese Ministry of Finance is seeking feedback from primary dealers on the potential reduction of long-term government bond issuance, indicating a shift in fiscal policy aimed at enhancing liquidity [1] Group 1: Bond Issuance - The Ministry has issued a survey regarding the possible reduction of bond auctions related to enhancing liquidity [1] - There is a proposal to decrease the issuance scale of bonds with maturities between 15.5 to 39 years by 100 billion yen (approximately 680 million USD) [1] - The Ministry is also inquiring about the cancellation of auctions for these maturity bonds scheduled for October [1]