Yield on 30-year JGB falls 1.5 bps to 2.885%.

Yield on 30-year JGB falls 1.5 bps to 2.885%.

Japan's government has taken a significant step to address the recent surge in yields of its super-long government bonds. In a revised issuance plan, the government will reduce sales of 20-year, 30-year, and 40-year Japanese Government Bonds (JGBs) more aggressively than initially planned, according to a document released by the Finance Ministry [1].

The revised plan, presented to primary dealers on Friday, includes a reduction of 20-year JGB sales by ¥1.8 trillion ($12.38 billion) to ¥10.2 trillion for the year ending in March, a 30-year JGB sales cut by ¥900 billion ($6.22 billion), and a 40-year JGB sales reduction of ¥500 billion ($3.43 billion) [1]. These cuts are part of a broader strategy to stabilize the bond market and address concerns over rising yields.

The move comes in response to the recent surge in super-long yields, which have reached record highs. Geopolitical pressures and the lack of demand in the market have contributed to this situation [3]. The Bank of Japan's decision to slow its tapering of bond purchases from next fiscal year further underscores the government's efforts to soothe market concerns [1].

The revised plan aims to reduce total JGB sales for the year through next March by ¥500 billion ($3.43 billion) to ¥171.8 trillion ($1.19 trillion) [1]. While this plan may ease upward pressure on yields, it is essential to note that the changes are not without risks. The increased issuance of shorter-term notes may shift the problem rather than eliminate it, and the effectiveness of the plan will depend on the demand for upcoming 20- and 30-year bond auctions [2].

The latest plan includes a reduction in 20-year bond sales that is twice the size suggested in earlier draft documents seen by Bloomberg and other media. This move is seen as a calming factor for trading in this key sector, but the market remains sensitive to geopolitical risks, such as the recent US attack on Iranian nuclear sites, which could complicate the picture [2].

The 30-year auction is set for July 3, and the market is closely watching the government's response to the challenges in the bond market. The reduction in 30-year bonds may be expanded further, and the ministry is considering buybacks of super-long bonds to address market volatility [2].

In summary, Japan's aggressive cut in super-long bond sales is a significant response to the recent surge in yields. While the plan aims to stabilize the bond market, its effectiveness will depend on the demand for upcoming auctions and the broader geopolitical environment.

References:
[1] https://www.tradingview.com/news/reuters.com,2025:newsml_L1N3SN06W:0-japan-to-cut-super-long-government-bond-sales-more-aggressively-document-shows/
[2] https://finance.yahoo.com/news/japan-flags-big-cut-long-005213271.html
[3] https://asia.nikkei.com/Business/Markets/Bonds/Japan-to-cut-superlong-government-bond-sales-amid-record-yields