Demand for Japanese government bonds is extremely weak: The bid-to-cover ratio for 10-year bonds, a measure of the demand strength, fell to 3.02 at Tuesday’s auction, below last month’s 3.30 and the 12-month average of 3.24. This reflects rising reluctance among investors before a snap national election on Sunday, February 8th. A victory for Japan’s ruling bloc would allow Prime Minister Sanae Takaichi to push further fiscal stimulus plans, which could significantly raise the government’s debt burden. As a result, the 10Y bond yield is up to 2.26%, near the highest level since 1999. Meanwhile, on Thursday, another key auction of 30-year bonds is scheduled, which will be closely watched by investors. The Japanese bond is under serious pressure.(The Kobeissi Letter)