Japan plans to cut super-long bond sales by 10% to address market oversupply concerns

From Yahoo Finance: 2025-06-18 23:06:00

Japan’s government plans to cut super-long bond sales by 10% to address market oversupply concerns. The Bank of Japan also slows tapering of bond purchases. The revised plan aims to balance supply and demand, with total JGB sales set to fall by $3.44 billion. Shorter-term bonds will be increased to offset reductions in long-term bonds.

Sales of 20-, 30-, and 40-year super-long bonds will be reduced, while shorter-term notes and bonds for households will increase. The government plans to cut sales of each super-long tenor by $8.6 billion in total. This move requires a careful balancing act to avoid financial vulnerability to bond market swings.

Debt markets rallied on the news of reduced super-long bond sales, with the highest demand for five-year JGBs in two years. Bonds saw gains, with shorter-dated securities leading the way. Yields moved inversely to bond prices, with the five-year yield falling and the 30-year yield rising. The global bond selloff last month targeted super-long JGBs due to advanced economies’ worsening finances.

The government’s decision not to increase sales of five-year JGBs was a positive surprise to the market. However, heavier reliance on shorter-term bonds reflects Japan’s falling credit quality. There is a call for lawmakers to manage debt with a sense of crisis. The revised plan aims to balance supply and demand while addressing market concerns.

Read more: Exclusive-Japan to cut super-long bond sales by 10% to calm markets, draft shows