Japan Rates Watch: JSDA April: Foreign investors turn net sellers in long-end JGBs

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Japan Rates Watch: JSDA April: Foreign investors turn net sellers in long-end JGBs

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Japan Rates Watch

JSDA April: Foreign investors turn net

sellers in long-end JGBs

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20 May 2026

Decline in foreign investor demand for JGBs Rates Research

The Japan Securities Dealers Association (JSDA) released its April 2026 OTC bond Japan

trading statistics. The key highlight is a shift in foreign investor behavior: in April,

foreign investors turned net sellers in the super-long JGB sector for the first time since

December 2024.

Tomonobu Yamashita

While foreign investors were net buyers in the medium- and long-term sectors, overall Rates Strategist BofAS Japan

inflows slowed. On an aggregate basis across the medium, long, and super-long +81 3 6225 7950

segments, net purchases of JGBs declined from ¥3.1tn in March to ¥1.8tn in April. tomonobu.yamashita@bofa.com

The slowdown appears to reflect rising inflation expectations and growing concerns that

the Bank of Japan could fall behind the curve. According to our FX and rates sentiment

survey, while the consensus expects the Middle East conflict to end by Q3 2026, only

14% of respondents anticipate Hormuz traffic returning to pre-March levels—suggesting

persistent inflation risks via disruptions to energy supply (see FX and Rates Sentiment

Survey: Fed hikes enter the chat 15 May 2026).

The market is already pricing in roughly an 80% probability of an additional rate hike at

the June meeting. Absent explicit support for further hikes from Prime Minister Takaichi

and Finance Minister Katayama, upside in medium-term JGB yields appears limited.

The 2s10s JGB curve has steepened the most among major developed markets since the

April US–Iran ceasefire and currently stands at around 135bp. Taking into account