Japan’s Two-Year Bond Sale Falters on Growing BOJ Rate Hike Risk

Japan’s two-year government bond auction on Thursday drew the weakest demand in 16 years, as investor caution lingered ahead of a potential interest rate hike by the Bank of Japan later this year.

The sale had an immediate impact in the secondary market, with the two-year yield — sensitive to monetary policy — trimming a decline to trade at 0.86%. That’s just a few basis points below the highest since 2008. Bond futures were little changed.