**MARKET BRIEF: JAPAN SOVEREIGN DEBT** **Thursday, January 29, 2026** **Session Overview** Japanese Government Bonds (JGBs) displayed mixed performance on Thursday. While shorter-dated notes faced selling pressure—tracking weakness in U.S. Treasuries—the super-long end found much-needed stability. **Auction Relief** Sentiment in the long end was buoyed by the successful execution of Wednesday’s **40-year JGB auction**. Despite fears of a demand vacuum, the sale attracted robust interest with a bid-to-cover ratio of **2.76x**, the strongest since March 2025. This demand helped pull the 40-year yield down to approximately **3.9%**, retreating from an all-time high of **4.205%** touched earlier in the week. **Yield Landscape** Benchmark yields remain at multi-decade highs but have softened from peak panic levels: * **10-Year:** Hovering near **2.25%**, down slightly from the 27-year high of 2.38%. * **30-Year:** Trading above **3.6%**. * **Policy Rate:** The Bank of Japan is holding steady at **0.75%**, with markets now eyeing June for the next potential hike. **Political Headwinds** Investors remain on high alert ahead of the **February 8 snap election**. Prime Minister Sanae Takaichi’s pledge for significant fiscal stimulus—specifically a suspension of the food sales tax—has stoked concerns over fiscal deterioration, drawing comparisons to the UK's 2022 "mini-budget" crisis. This political uncertainty continues to cap any significant rally in bond prices. [Japan Bond Meltdown Sends Yields to Record High](https://www.youtube.com/watch?v=maeAgCeMwdQ) This video provides relevant context on the recent surge in JGB yields and the political factors driving the "meltdown" mentioned in the brief. http://googleusercontent.com/youtube_content/0