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Japan's super-long yields rise to all-time highs on fiscal, auction concerns

  • Japan's longest-dated government bond yields surged to all-time highs on May 20, 2025, following a poor auction in Tokyo that raised concerns over demand.
  • This surge occurred amid the Bank of Japan's quantitative tightening since mid-2024 and political debate over consumption tax cuts, with Prime Minister Ishiba opposing increased debt issuance.
  • Yields on 40-year bonds reached 3.6%, while 20-year and 30-year yields also rose sharply, reflecting weakening market appetite as the BOJ reduced its holdings by ¥25 trillion since February 2024.
  • Analysts noted the auction results were 'lacklustre' and highlighted structural demand slowdowns, with strategist Naomi Fink stating the government must maintain a commitment to returning to primary balance.
  • The rising yields signal a fiscal warning for Japan's heavily indebted government and suggest potential market instability as the BOJ gradually withdraws its bond purchase support.
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Reuters broke the news in United Kingdom on Tuesday, May 20, 2025.
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