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6d ago

Japan Weighs Cutting Super-Long Bond Issuance as Yields Remain Elevated

Tokyo will cut long-dated bond supply to ease pressure on state finances by containing surging yields

A passerby walks past in front of the Bank of Japan headquarters in Tokyo, Japan January 23, 2025. REUTERS/Issei Kato/File Photo
Image
Yen and U.S. dollar banknotes are seen in this illustration taken March 19, 2025. REUTERS/Dado Ruvic/Illustration
A man looks at an electronic stock quotation board outside a brokerage in Tokyo, Japan, November 9, 2016. Picture taken with slow shutter speed. REUTERS/Issei Kato/File Photo

Overview

  • Japan’s Ministry of Finance is set to review its super-long bond programme and may trim 20-, 30- and 40-year issuance following record jumps in long-dated yields.
  • 40-year JGB yields briefly dipped after the issuance-cut report but remain above 3.3%, with 20- and 30-year yields hovering near multi-decade highs.
  • Bank of Japan Governor Kazuo Ueda said the central bank will closely monitor large swings in super-long yields to prevent spill-overs into shorter-term borrowing costs.
  • A mid-week auction of 500 billion yen of 40-year bonds will test whether investor demand holds up as life insurers and foreign investors reduce purchases.
  • The yen has strengthened by nearly 9% this year on safe-haven flows and yield differentials, raising prospects of capital shifts that could ripple through global markets.