Thursday's auction of 30-year Japanese government bonds saw demand surpass the average of the past 12 months, as elevated yields drew in buyers.

The bid-to-cover ratio came in at 3.79, slightly below the previous auction's 3.86 but comfortably ahead of the 12-month average of 3.52. The tail—the gap between the average accepted price and the lowest accepted price—widened to 0.28 from 0.21 in the prior sale.

Japanese government bond futures held onto their gains following the release of the auction results.

With Japanese ministries seeking record budget allocations for the next fiscal year, market participants are closely watching Prime Minister Takayuki Suga's expansionary fiscal policies. Investors are consequently demanding higher compensation for holding longer-dated debt.

Market players are also weighing the long-term supply outlook for Japanese government bonds. The Ministry of Finance has scheduled a meeting with primary dealers later this month, which could serve as a key platform for discussing conditions in the bond market.