Japan’s 3-Month Bill Auction Clears at 1.2555% Average Yield

Japan’s Ministry of Finance sold its latest three-month Treasury Discount Bills at a weighted-average yield of 1.2555% on Friday, extending the rise in yields seen across recent short-term government debt auctions. Issue No. 1409 cleared at a weighted-average price of 99.6572 per ¥100 of face value, while the lowest accepted price was 99.6530, corresponding to a highest accepted yield of 1.2709%.

The ministry received ¥8.8935 trillion of competitive bids and accepted ¥2.68846 trillion. Another ¥811.5 billion was accepted through the first non-price competitive auction for JGB Market Special Participants. Together, those accepted amounts total ¥3.49996 trillion, essentially matching the roughly ¥3.5 trillion offering amount announced for the sale.

The average yield was 4.88 basis points above the 1.2067% level at the previous three-month bill auction on September 17. Competitive bids also rose by ¥265.3 billion from that sale, while the amount accepted through competitive bidding increased by only ¥5.98 billion. Using the ministry’s published totals, competitive bids were about 3.31 times the competitive amount accepted, compared with roughly 3.22 times on September 17.

Higher yield came with firm competitive bidding

The Ministry of Finance auction result shows that the cutoff at the lowest accepted price produced a yield of 1.2709%, only 1.54 basis points above the 1.2555% weighted-average yield. That gap was narrower than at the September 17 sale, when the highest accepted yield was 1.2292% and the weighted-average yield was 1.2067%, a difference of 2.25 basis points.

The allotment ratio for bids submitted at Friday’s lowest accepted price was 35.9380%. That figure describes how bids at the cutoff price were apportioned once the ministry had filled the competitive portion of the auction. It should not be read by itself as a broad measure of demand, because the accepted price range, the volume submitted at other prices and the non-price competitive allocation also shape the final result.

Friday’s simple competitive bid-to-accepted ratio of about 3.31 times was higher than the prior sale’s roughly 3.22 times, even as the average yield moved up. Taken together, those two facts show that the higher clearing yield did not come with a decline in the overall volume of competitive bids relative to the amount accepted. The ministry does not publish a single demand score, so the auction is better read through several figures rather than through the yield alone.

The price data tell the same story from the opposite direction. Treasury Discount Bills are sold below their ¥100 face value and mature at face value, so a lower purchase price corresponds to a higher annualized yield. The weighted-average price on September 25 was 99.6572, down from 99.7099 on September 17. The lower average price therefore produced the higher reported yield.

Three-month auction yields have climbed through September

The latest result continues a clear rise across the recent three-month bill sequence. The weighted-average yield was 1.0794% on August 28, 1.1076% on September 4 and 1.1149% on September 11. It then moved to 1.2067% on September 17 before reaching 1.2555% on September 25.

From the August 28 auction to Friday’s sale, the weighted-average yield increased by 17.61 basis points. Most of that move came during the second half of September: the increase from September 11 to September 25 was 14.06 basis points. The step from September 17 to September 25 alone accounted for 4.88 basis points.

The corresponding weighted-average prices moved lower as yields rose. On August 28, the three-month bill auction cleared at an average price of 99.7316 per ¥100. The September 4 result was 99.7246, followed by 99.7228 on September 11, 99.7099 on September 17 and 99.6572 on September 25. Those figures provide a direct auction-by-auction record of how the cost of very short-term government funding has shifted over the past month.

Bid volumes have not moved in a straight line over the same period. Competitive tenders totaled ¥9.1171 trillion on August 28, rose to ¥9.697 trillion on September 4, then eased to ¥8.94681 trillion on September 11 and ¥8.6282 trillion on September 17 before increasing to ¥8.8935 trillion in the latest sale. Accepted competitive amounts remained much more stable, ranging from about ¥2.68 trillion to ¥2.84 trillion across those auctions.

That distinction matters when comparing auction results. A higher yield can reflect the prices investors are willing to pay for the bills, but the total amount tendered shows how much competitive demand was submitted at all price levels. Friday’s result paired the highest average yield in this recent five-auction sequence with a competitive bid total that was above the previous week’s level.

Issue settles September 28, next sale is October 2

Issue No. 1409 is scheduled to be issued on September 28 and mature on January 6, 2027. The ministry’s September auction calendar classifies it as a three-month Treasury Discount Bill, even though the precise number of days between settlement and maturity reflects the government’s dated issuance schedule rather than an exact 90-day interval.

The ¥811.5 billion non-price competitive allocation was priced at the same 99.6572 weighted-average price established in the competitive auction. Added to the ¥2.68846 trillion competitive acceptance, it brought total accepted issuance to just under ¥3.5 trillion. That is consistent with the ministry’s announced offering size of about ¥3.5 trillion for the issue.

The next scheduled short-term sale is already on the calendar. The Ministry of Finance said on September 25 that it plans to auction Treasury Discount Bill issue No. 1410 on October 2, with an offering amount of about ¥3.5 trillion. That issue is scheduled for October 5 settlement and January 12, 2027 maturity, giving investors the next direct read on whether the recent rise in three-month auction yields continues.