(Bloomberg) -- Investors lapped up 30-year Japanese government bonds in an auction on Thursday that indicates policymakers are having some success in quelling debt-market volatility.

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The bid-to-cover ratio was at 3.58, the strongest since February. That compares with 2.92 at the auction in June and the 12-month average of 3.33. The tail, or gap between average and lowest-accepted prices, came in at 0.31, versus 0.49 at the previous sale.

“Not stellar, but good enough,” said Martin Whetton, head of financial markets strategy at Westpac Banking Corp. “Because this was well telegraphed it was likely a buy-the-rumor, sell-the-fact event, but going forward, as the market gets used to lower supply it should be constructive.”

While upward pressure on long-term Japanese yields has abated since the Ministry of Finance announced a plan to cut bond sale amounts, the auction came hot on the heels of spike in 30-year yields in the UK and US.

Yields across the curve remained up after the auction with the 30-year 2bps higher at 2.901%. Government bond futures held their losses.

The MOF said in June it would reduce offerings of 20-, 30-, and 40-year debt from this month by a combined ¥3.2 trillion ($22 billion) through the end of March 2026. Meanwhile, the Bank of Japan said it would slow its pullback from debt purchases.

Earlier this week, relatively strong demand at Japan’s sale of 10-year sovereign notes bolstered expectations for the 30-year auction.

Yet global trends and an election this month in Japan are likely to keep investors on guard over the ability of governments to cover massive budget deficits. The challenge for Japan to limit gains in 30-year yields is made harder because big local buyers such as life insurers have turned away from purchases of this maturity.

The Liberal Democratic Party’s Policy Chief and former Defense Minister Itsunori Onodera said in an interview with Bloomberg last week that the country’s fiscal outlook was already facing a “yellow alert.” Expenditures may climb as Japanese Prime Minister Shigeru Ishiba sets pay raises and a ¥1 quadrillion economy as the top campaign promises for this summer’s upper house election.

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