Japan Fixed Income Markets Weekly: Fiscal Path and JGB Supply in Focus

Research evidence excerpt

Japan Fixed Income Markets Weekly: Fiscal Path and JGB Supply in Focus

J P M O R G A N Global Markets Strategy

26 June 2026

Japan Fixed Income Markets

Weekly

Fiscal Path and JGB Supply in Focus

• The JGB market remained largely flow-driven and lacked clear direction as Japan Markets Research

AC yields reversed lower later in the week, with those beyond 7 years declining Takafumi Yamawaki

broadly in parallel. Flow data showed domestic banks buying mainly in the (81-3) 6736-1748

medium-term sector, while life insurers were largely limited to switching from takafumi.yamawaki@jpmorgan.com

off-the-run into on-the-run issues. Demand in the super-long sector was driven Hiroki Yagi AC

primarily by pension rebalancing and overseas investors, underscoring a (81-3) 6736-6783

fragile, price-sensitive demand structure. hiroki.yagi@jpmorgan.com

JPMorgan Securities Japan Co., Ltd.

• Weak 5-year and 20-year auction results highlighted the lack of improvement

in investor demand. While expectations for issuance reductions in the 10-year

sector provided intermittent support ahead of the PD meeting, no such

reductions were announced, suggesting the 10-year sector could come back

under pressure.

• BoJ hike pricing remains broadly unchanged, and market focus has shifted

from monetary policy to fiscal policy as growth investment discussions came

into focus this week. While fiscal expansion concerns are building, tighter

supply-demand conditions in the +30y JGBs have kept ASW levels rich (i.e.,

swap spreads wide) since late March. This strength may partly reflect

uncertainty over whether consumption tax cut proposals can be finalized,

providing some support to the super-long sector.

• The Takaichi administration targets over JPY 370tn in public–private