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Bond Traders in Japan Can’t Stop Fretting Over Long-End Supply

  • Spread between 10-, 30-year JGBs rises above 50 basis points
  • Steepening bias likely to continue amid supply concern: Kato
Views Of Tokyo's Skyline As Abenomics Shows ECB Why Fiscal Backup Can’t Ensure Inflation
Photographer: Keith Bedford/Bloomberg

Moves in Japanese government bonds are signaling concern among traders about the market’s ability to absorb an increase in supply of longer-dated notes from July.

Yields on the so-called super-long maturities have risen faster even after the government concentrated the bulk of the rise in its record fiscal 2020 debt sales in shorter maturities. That’s sent Japan’s curve to its steepest since November, with the spread between the 30-year yield and the 10-year yield climbing back above 50 basis points. It was at 25 basis points around mid-March.