Bonds
Japan Confronts Biggest Bond Loss Globally as BOJ Rate Hikes Upend Market
Some strategists see Japan’s yields declining later this year.
Photographer: Shoko Takayasu/BloombergThis article is for subscribers only.
Investors are rethinking their strategies for Japanese sovereign bonds after the Bank of Japan’s pivot to interest-rate hikes in the past year triggered the biggest losses among global debt markets.
Key to their shift is the outlook for bond yields in the next 12 months, with some market participants predicting that benchmark 10-year borrowing costs won’t climb as sharply as the fiscal year that ends today, when rates more than doubled. In the latest potentially bearish news for Japan’s debt market, the central bank announced Monday that it would reduce buying of super-long bonds due in 10 years to 25 years.