Japan’s Super-Long Yield Gap Near Biggest in Two Decades on BOJ
- Receding BOJ rate-hike outlook increases demand for bonds
- Demand firm for 20-year while 30- and 40-year bonds struggle
Yields on Japan’s longest-maturity government bonds relative to shorter debt have climbed to near two-decade highs as investors position for the central bank to delay further interest-rate hikes.
Speculation that the Bank of Japan would stand pat on policy for the rest of the year has boosted demand for bonds, but the nation’s super-long debt maturing in 30 years and 40 years have been weighed down by supply concerns. Investors are instead eyeing 20-year bonds, which are less sensitive to interest rate moves than longer debt but at the same time offer greater returns than the short end of the curve.