Japan to sell 700 billion yen in 30-year notes on Aug. 7

Japan to sell 700 billion yen in 30-year notes on Aug. 7

Japan's Ministry of Finance has announced plans to issue 700 billion yen in 30-year government bonds on August 7, 2025. This issuance comes amid a period of heightened political and economic uncertainty, as well as significant changes in the yield landscape of Japanese government bonds (JGBs).

The yield on Japan's 30-year bond has been on a steady upward trajectory, reaching an all-time high of 3.21% in July 2025 [1]. As of July 18, 2025, the yield stood at 3.07%, marking a 0.02 percentage point decrease from the previous session. Over the past month, the yield has increased by 0.15 points, and it is 0.93 points higher than a year ago [1]. Despite this upward trend, the yield is expected to trade at 2.81% by the end of the current quarter and 2.62% in 12 months, according to Trading Economics global macro models and analysts' expectations [1].

The issuance of 700 billion yen in 30-year bonds is part of the government's strategy to manage its debt and meet fiscal obligations. Retail investors have shown increasing interest in JGBs, particularly 10-year floating-rate bonds, due to their attractive coupon rates. The coupon on 10-year floating-rate JGBs for individuals topped 1% in July, the highest since 2008 [2].

Political instability, however, has added a layer of uncertainty to the bond market. Prime Minister Shigeru Ishiba's coalition lost its grip on the upper house, leading to speculation about potential changes in fiscal policy. The opposition lawmakers support more borrowing to fund tax cuts, which could lead to increased government debt and higher bond yields [3].

The Bank of Japan (BOJ) is also expected to play a significant role in shaping the bond market. The central bank is scheduled to meet on July 25, and while no immediate rate hike is expected, the U.S. trade deal has given the BOJ more confidence in Japan's growth outlook. Traders are betting on a potential rate hike before the end of the year [3].

Investors are currently taking a wait-and-see approach, as Japanese bond yields have barely budged this week in anticipation of crucial policy updates from the Fed and the BOJ. The benchmark 10-year government bond yield hovered at 1.555%, while short-term yields dipped slightly [4]. The 20- and 30-year yields have continued to rise, reflecting speculation about potential fiscal stimulus if opposition parties push through debt-backed tax cuts [4].

The issuance of 700 billion yen in 30-year bonds is set to be one of the most significant events in Japan's bond market this year. The outcome of the issuance and the subsequent policy decisions by the BOJ and the Fed will have significant implications for the global bond market and the Japanese economy.

References:
[1] https://tradingeconomics.com/japan/30-year-bond-yield
[2] https://asia.nikkei.com/Business/Markets/Bonds/Japan-retail-investors-drawn-to-JGBs-with-returns-at-17-year-high
[3] https://www.mitrade.com/insights/news/live-news/article-3-994296-20250729
[4] https://finimize.com/content/japanese-bond-yields-stay-steady-as-markets-await-major-policy-calls