The 40-year Japanese government bond bid-to-cover ratio is 2.7, and the market has voted with its money.

Despite inflation concerns sparked by conflicts in the Middle East, Japan’s 40-year government bond auction remains in high demand. The bid-to-cover ratio was 2.70, higher than the previous auction and the monthly average. The winning yield was 3.84%, up from the last auction. The current yield on the 40-year government bond is 4.09%, below the early-month high of 4.355%. The government said it will not increase the annual issuance size of government bonds to raise funds to supplement the budget, and the Ministry of Finance will also use about $3.2 billion in reserve funds to subsidize public utility spending.