MONEY MASTER

Japan’s latest 40-year government bond sale delivered  stronger-than-average demand , offering temporary relief to markets after weeks of sharp volatility in long-term yields. Quick Summary 40-year bond auction beat demand expectations Yields eased after last week’s record spike Election-driven fiscal concerns remain unresolved More volatility likely in bonds and yen markets What Happened The  bid-to-cover ratio  came in at  2.76 , above the previous auction ( 2.585 ) and the  12-month average of 2.53 The  40-year yield fell 3.5 basis points to 3.9%  after the auction Demand eased  immediate fears over Japan’s long-term debt , though uncertainty remains elevated Why This Matters The auction followed a turbulent week in Japanese bond markets, triggered by fiscal and political shocks: Long-dated yields  spiked to record highs  after Prime Minister  Sanae Takaichi  proposed a  two-year removal of food sales tax Forty-year yie...

Malaysia is set to  moderate its government bond issuance in 2H 2025 , a move that aligns with fiscal discipline efforts and could  support bond prices  in the coming months. For fixed-income investors, this shift may signal a  potential entry point , particularly in long-duration bonds, amid growing expectations of a  rate cut cycle . Bond Issuance Slows as Government Targets Fiscal Consolidation The Malaysian government is expected to issue between  RM64 billion and RM90 billion  worth of  MGS and GII  in the second half of 2025 —  a slowdown from RM91 billion in 1H . This reflects the administration’s push to achieve its  reduced fiscal deficit target of 3.8% of GDP , down from 4.3% in 2024. 2025 Budget : Development spending allocation set at RM85 billion Issuance cap : MGS and GII are only used to finance development expenditure “We expect supply pressure to ease considerably,”  said Kenanga Investment’s Wan Suhaimie. Dema...

Japan’s Ministry of Finance (MOF) saw  robust investor demand  at its 30-year government bond auction on Thursday, marking the  strongest bid-to-cover ratio since February  — a sign that efforts to stabilize the debt market are gaining traction. Auction Metrics at a Glance: Bid-to-cover ratio:  3.58 (vs. 2.92 in June; 12-month average: 3.33) Tail (price gap):  0.31 (improved from 0.49 previously) The improved metrics reflect  renewed investor appetite  for long-duration Japanese government bonds (JGBs), even as global markets contend with volatility following recent yield spikes in the US and UK. What’s Driving Demand? Two major policy shifts have helped cool volatility in Japan’s long bond segment: Reduced Supply : In June, the MOF committed to trimming issuance of 20-, 30-, and 40-year bonds by ¥3.2 trillion (~US$22 billion) through FY2025. Lower supply = less upward pressure on yields. Easing BOJ Tightening : The  Bank of Japan signaled a ...

UK government bonds (gilts) fell sharply , erasing Wednesday’s gains, as markets shifted focus from a smaller debt plan to  long-term fiscal concerns  and the threat of rising global borrowing costs. Key Market Moves: 10-year gilt yield surged to 4.81% , highest since mid-January Gilts  underperformed European peers  as investor optimism faded Market concerns include: Limited fiscal headroom Potential shocks  (like global rate hikes or US tariffs) What’s Fueling the Selloff? Despite Chancellor  Rachel Reeves restoring her fiscal buffer , analysts say the UK remains  vulnerable to external shocks . The  Office for Budget Responsibility (OBR)  warned Reeves’ buffer could be wiped out if: Trump imposes 20% tariffs globally Borrowing costs rise by just 0.6% Fiscal Uncertainty Ahead Autumn budget in October  could bring  tax hikes or spending cuts . OBR estimates a  46% chance of Reeves breaking her fiscal rule  (taxes funding ...

A government-linked think tank in China has proposed the issuance of 2 trillion yuan (US$281 billion) in special government bonds to create a market stabilization fund , according to a report from Chinese media outlet The Paper . The fund would help stabilize markets by buying and selling blue-chip stocks and exchange-traded funds (ETFs) . This recommendation comes from the Institute of Finance & Banking at the Chinese Academy of Social Sciences , a think tank connected to China’s State Council . The initiative is part of a broader stimulus push that began in late September to support equities and the economy. However, detailed plans for the fund have yet to be disclosed. The People’s Bank of China (PBOC) has already introduced several programs, including a specialized re-lending facility to help listed companies and major shareholders buy back shares , and a swap facility to provide liquidity to institutional investors for purchasing stocks. Despite the stimulus measures, C...

  The assumptions driving this year’s global financial markets are being rapidly rethought. In bond and currency markets, investors are redeploying money amid doubts about the US economy, leading to speculation that the Federal Reserve may need to cut interest rates faster or deeper than planned. A weakening American consumer, evidenced by disappointing corporate earnings, is driving this shift. Simultaneously, stockholders are growing skeptical about the immediate payoff of technology companies' massive investments in artificial intelligence. As a result, investors have been dumping shares of big winners such as Nvidia Corp and Broadcom Inc. Copper and other industrial metals are reversing recent gains due to China’s slowdown and concerns over the US and tech sectors. “It does seem that an unwinding has begun of popular trades that brought valuations to stupid levels,” Louis-Vincent Gave, CEO of Gavekal Research, wrote in a note to clients Thursday. At Apollo Global Management, ch...