Japan Fixed Income Markets Weekly: Cheap 10-20Y JGBs Continue to Struggle to Attract Duration Buyers Even After the June Hike

Research evidence excerpt

Japan Fixed Income Markets Weekly: Cheap 10-20Y JGBs Continue to Struggle to Attract Duration Buyers Even After the June Hike

J P M O R G A N Global Markets Strategy

19 June 2026

Japan Fixed Income Markets

Weekly

Cheap 10-20Y JGBs Continue to Struggle to Attract

Duration Buyers Even After the June Hike

• The BoJ raised the policy rate by 25bp from 0.75% to 1.00%, in line with prior Japan Markets Research

AC media reports (Nikkei). This reflects a backdrop in which upside risks to Takafumi Yamawaki

inflation remain, while downside risks to the economy have receded, supported (81-3) 6736-1748

by progress in diversifying sourcing of Middle East-dependent raw materials takafumi.yamawaki@jpmorgan.com

and the impact of government subsidies, thereby allowing the BoJ to proceed Hiroki Yagi AC

with further policy normalization. (81-3) 6736-6783

hiroki.yagi@jpmorgan.com

• On JGB purchases, the BoJ confirmed that it will maintain the current pace of JPMorgan Securities Japan Co., Ltd.

reductions through March 2027 and thereafter continue purchases at a monthly

pace of JPY 2.0tn. While net QT is expected to slow gradually, the reduction

in BoJ JGB holdings will remain sizable – FY26 (JPY -48.0tn), FY27 (JPY

-44.8tn), and FY28 (JPY -39.3tn). As a result, JGB supply to the market is set

to increase, particularly in the 6-10y sector, leaving supply-demand concerns

in place. Although issuance cuts in the super-long sector since April have

helped stabilize conditions, concerns persist given the lack of a stable investor

base.

• In the JGB market, supply-demand dynamics remain the key theme, with the

10-20y sector particularly exposed to supply pressures, while recent yield

movements have lacked clear direction. Changes to the SLF framework are