Assessing the implications of potential rebalancing by Japan’s pension funds

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Assessing the implications of potential rebalancing by Japan’s pension funds

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Liquid Insight

Assessing the implications of potential

rebalancing by Japan’s pension funds

Key takeaways 15 July 2026

Rates and Currencies Research• Given recent news flow on Japanese public pension fund allocation, we examine

Global implications of a potential shift.

• An increase in domestic bonds' allocation would support JGBs, esp. 10-20yr sector.

Global Rates & Currencies Research

• We also discuss implications for JPY, G10 FX, and USD and EUR rates market. MLI (UK)

Shusuke Yamada, CFA

FX/Rates Strategist

BofAS JapanBy Shusuke Yamada, Tomonobu Yamashita, Sphia Salim, +81 3 6225 8515

shusuke.yamada@bofa.comMark Cabana

Chart of the day: Cumulative investment flows by Japan’s trust accounts (¥tn) TomonobuRates StrategistYamashita

Trust accounts continuing to rebalance by selling equities and buying bonds BofAS Japan

+81 3 6225 7950

tomonobu.yamashita@bofa.com

JGB Japanese equity LT Foreign bond Foreign equity Sphia Salim

Rates Strategist

80 MLI (UK)

+44 20 7996 2227

60 sphia.salim@bofa.com

40 Mark Cabana, CFA

20 Rates Strategist BofAS

0 +1 646 743 7013

mark.cabana@bofa.com

-20

-40 OliverFX and LevingstonRates Strategist

-60 Merrill Lynch (Hong Kong)

+852 3508 4631

2014 2016 2018 2020 2022 2024 2026 oliver.levingston@bofa.com

Source: BofA Global Research, JSDA, MoF See Team Page for List of Analysts

BofA GLOBAL RESEARCH

Potential rebalancing by Japan’s public pension funds

Liquid InsightThis note examines the potential implications of portfolio rebalancing by Japan’s public Recent Publications

pension funds. We do not take a view on whether such rebalancing will occur, nor on its

scale or direction. However, given higher JPY yields, the yen’s decline to date, and recent