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yesterday

Japan Weighs Cutting Super-Long Bond Issuance as Yields Soar

Reducing super-long bond supply could cap surging yields to protect state finances

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
A banknote of Japanese yen is seen in this illustration picture taken June 15, 2022. REUTERS/Florence Lo/Illustration/File Photo

Overview

  • Japan’s Finance Ministry is considering trimming issuance of 20-, 30- and 40-year government bonds to calm a sell-off in long-dated debt
  • Last week the 40-year yield hit an all-time high while 30- and 20-year maturities climbed to multi-decade peaks amid weaker demand
  • Markets are focused on Wednesday’s auction of about ¥500 billion of 40-year bonds as a test of investor appetite and signs of fiscal strain
  • Global bond markets rallied with US Treasuries leading gains after reports that Japan may adjust its debt-sales programme
  • Investors await the Bank of Japan’s June review of its quantitative tightening programme to gauge future bond-buying support