A $2 Trillion Debt Deluge Means BOJ Needs to Buy More Bills
- T-bills account for three quarters of increase in issuance
- Unfavorable basis has undermined purchases by global funds
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A surge in Japan’s bill issuance is exerting upward pressure on yields and reinforcing the case for the central bank to buy more.
Yields on three-month treasury bills rose to -0.06% last week, a level last reached in early 2016 before the Bank of Japan introduced its negative rate policy. Demand from global funds, typically the biggest buyers, has failed to keep pace with supply, prompting the BOJ to step up purchases.