Superlong Japanese yields jumped after an auction of 40-year sovereign bonds met the weakest demand since July, adding pressure on the government to reduce issuance.

The 40-year yield rose 5 basis points following the sale, to 3.335% as of 4:20 p.m. in Tokyo, while the 30-year rate jumped 7 basis points. Yields on both maturities last week reached the highest on record after the lowest demand since 2012 at an auction of 20-year bonds.

"The fact today’s auction didn’t go very well supports the narrative that the government will adjust its issuance of super-long bonds,” said Kazuhiro Sasaki, head of research at Phillip Securities Japan.

Wednesday's sale was a key test globally for longer tenors amid concern that rising government spending will take budget deficits into dangerous territory. In Japan it was also being viewed as an important gauge of appetite from large institutional investors, who have not filled the gap left by the central bank reducing its purchases.

"The weak bidding for the 40-year bond was probably due to the continued high volatility and the fact that the actual issuance amount will not be reduced for another month, making most investors reluctant to take on risk,” said Ataru Okumura, a senior interest-rate strategist at SMBC Nikko Securities.

This week’s auction results also show how traders and investors are nervous, especially with the Finance Ministry due to sell benchmark 10-year notes and 30-year debt next week.

In a sign that the government may be preparing to adjust issuance after the rout, the Finance Ministry sent a questionnaire to market participants on Monday evening that asked for their views on issuance and the current market situation, according to people familiar with the matter.

The step was seen as unusual because of its timing and the wide group of people contacted, and sparked a rally in superlong-term government bonds Tuesday.

The moves followed aggressive upward pressure on global borrowing costs last week that drove up yields on long-maturity debt from the United States to Japan.

"In a sense, this is a positive for the bond market, because it increases the likelihood that the Finance Ministry will do something,” said Sasaki at Phillip Securities, referring to building pressure on Japan’s long-term yields.

The average bid-to-cover ratio, a measure of demand, for Wednesday's ¥500 billion ($3.5 billion) auction of March 2065 bonds was 2.21. That was lower than 2.92 at the last auction in March.

Next month is shaping up as pivotal for the bond market, with the central bank holding a policy meeting on June 16 and 17 at which it is expected to consider any changes to its tapering of debt purchases. Meanwhile, the Finance Ministry's questionnaire suggests that it is considering input from market participants on bond issuance.