Live Markets: Structural buyers shift into JGBs - BNY

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06/08/2026 10:17

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STRUCTURAL BUYERS SHIFT INTO JGBs – BNY
Investors are increasingly concerned about Japan's fiscal outlook and demand for government debt, with 10-year bond yields hovering near three-decade highs.
However, “the MOF shouldn’t fear an orderly rise in yields as foreign demand for JGBs gains ground,” Geoff Yu, senior EMEA market strategist at BNY, says.
Based on BNY data, between January 1 and July 22, “foreign investors broadly absorbed the domestic reduction (in government bond demand) and added modestly on net.”
“Together, insurers and government institutions added almost $4 billion, indicating that the marginal demand is coming from structural, long-duration and official-sector buyers,” BNY’s Yu adds.
“If yields continue to rise in an orderly way, insurers, government institutions and central banks should remain the main buyers,” he argues.
The risk is that higher yields begin to reflect fiscal credibility concerns rather than better compensation for duration. In that scenario, banks, fast-money and alternatives may continue cutting exposure, he said.
(Stefano Rebaudo)
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