Japan Rates Watch: JSDA May: Japanese lifers’ switch to on-the-run long-end issues accelerates

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Japan Rates Watch: JSDA May: Japanese lifers’ switch to on-the-run long-end issues accelerates

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Japan Rates Watch

JSDA May: Japanese lifers’ switch to on-

the-run long-end issues accelerates

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22 June 2026

Key takeaways Rates Research

• Foreign investors turn net buyers of super‑long JGBs in May. Japan

• Life insurers were net sellers in the super‑long sector but appear to be advancing

bond switching.

• Supply‑demand remains tight in long‑end on‑the‑run issues, while the 10‑year remains Tomonobu Yamashita

relatively vulnerable. RatesBofASStrategistJapan

+81 3 6225 7950

tomonobu.yamashita@bofa.com

Strong demand for long-end on-the-run issues continues

The JSDA data on OTC bond trading for May 2026 points to firm demand for on‑the‑run

long‑end JGBs. In April, foreign investors turned net sellers in the long end for the first

time since December 2024, amid rising inflation expectations. In May, however, they

reverted to net buying. MoF flow data suggest they were net buyers from mid‑May

through month‑end, likely reflecting the absence of increased issuance at JGB auctions

under the supplementary budget and dip‑buying at higher yields.

In May, life insurers were net sellers of long‑end bonds. While the amount sold rose

sharply from around ¥360bn in April to ¥1.1tn, purchases also increased from ¥690bn to

¥920bn. This is consistent with investment plans announced by major life insurers in

April and suggests an ongoing shift from low‑coupon to higher‑coupon bonds. As a

result, selling pressure is likely to persist in off‑the‑run issues such as JX75, while

on‑the‑run issues such as JX90 and JU19 are likely to attract demand from lifers (see

Japan Rates Viewpoint: Switching dynamics signal rotation into higher-coupon JGBs 03

June 2026).