Logo

Japan Cuts Super-Long Bond Sales by 10% to Ease Market Pressure

In a rare revision of its fiscal plan, Japan’s government will cut super-long bond sales by about 10%, reducing total bond issuance by 500 billion yen ($3.44 billion). This move aims to ease market turbulence caused by record-high yields and sluggish demand at recent auctions. The reduction in 20-, 30-, and 40-year bonds will be partly offset by increased sales of shorter-term bonds and household-targeted securities, signaling a cautious approach in managing debt amid shifting economic dynamics.

Japan Cuts Super-Long Bond Sales by 10% to Ease Market Pressure

Japan Plans to Reduce Super-Long Bond Issuance Amid Market Concerns

Japan's government is set to trim its sales of super-long bonds by roughly 10% from the initial plan, a rare and notable adjustment to this fiscal year's bond program. This move aims to ease growing market worries about supply-demand imbalances following subdued demand at recent auctions and a sharp spike in super-long bond yields, which recently hit record highs and unsettled investors.

An Effort to Stabilize the Bond Market

The decision comes as a response to weak appetite for these lengthy maturities and follows the Bank of Japan’s cautious approach toward scaling back its bond purchase tapering starting next fiscal year. By slowing the reduction pace, the central bank signaled its intent to carefully retreat from years of massive monetary stimulus.

Details of the Revised Issuance Strategy

The updated plan, scheduled to be discussed with primary dealers this Friday, outlines cuts in the 20-, 30-, and 40-year bond sales. Specifically, sales of 20-year bonds will be lowered by 900 billion yen to 11.1 trillion yen, 30-year bonds by 900 billion yen to 8.7 trillion yen, and 40-year bonds by 500 billion yen to 2.5 trillion yen. From next month onward, each auction will see a 100 billion yen reduction in these tenors.

To partially offset these reductions, the government plans to increase offerings of shorter-term debt instruments. Sales of two-year debt will rise by 600 billion yen annually, with incremental increases of 100 billion yen per auction set to start in October, pushing total issuance to 2.7 trillion yen. Furthermore, one-year and six-month treasury discount bills will each see similar boosts of 600 billion yen. Additionally, the issuance of principal-guaranteed bonds aimed at households will be expanded by 500 billion yen.

Balancing Challenges Ahead

While increasing shorter-dated issuance helps to smooth supply pressures, it comes with challenges. More frequent debt rollover will be required, exposing government finances to market volatility more acutely.

Background: Why the Shift?

The initial intent had been to reduce 30- and 40-year bond issuance due to weaker demand from life insurers, who have mostly fulfilled their purchase needs to meet updated solvency rules. However, broader concerns over the fiscal health of advanced economies triggered a widespread sell-off in super-long government bonds globally last month, pushing Japanese super-long bonds into focus.

Potential Bond Buybacks on the Horizon

Alongside reduced issuance, there are discussions about repurchasing some previously issued super-long bonds that carry low interest rates. Such buybacks could help improve the market supply-demand balance and ease yield pressures.

The Path Forward

This revision in Japan’s bond issuance strategy highlights a cautious approach to managing government debt and market stability amid evolving economic conditions. As Japan balances stimulus withdrawal with investor assurance, the adjustments in bond issuance reflect mindful efforts to navigate complex financial landscapes.

Fed Chair Powell Assures Trump of Non-Political Basis for Rate Decisions
Fed Chair Powell Assures Trump of Non-Political Basis for Rate Decisions

Federal Reserve Chair Jerome Powell met with President Donald Trump at the White House, emphasizing that monetary policy decisions will continue to rely on objective economic analysis rather than political influence. The central bank reaffirmed its commitment to address inflation, growth, and employment based on incoming data. Despite Trump's calls for lower rates, the Fed maintains a cautious stance amid tariff uncertainties and expects to hold rates steady for the near term.

China's Central Bank Increases Gold Reserves for Seventh Consecutive Month
China's Central Bank Increases Gold Reserves for Seventh Consecutive Month

China's central bank continued its gold buying spree in May, marking the seventh consecutive month of accumulation. Gold reserves grew to 73.83 million fine troy ounces, valued at nearly $242 billion. Despite gold prices stabilizing after an April record high, China’s purchases reflect strategic diversification away from dollar assets. Globally, central banks are expected to buy 1,000 metric tons of gold in 2025, signaling sustained confidence in bullion as a reserve asset.

Christine Lagarde’s Vision: Can the Euro Challenge the US Dollar’s Dominance?
Christine Lagarde’s Vision: Can the Euro Challenge the US Dollar’s Dominance?

European Central Bank President Christine Lagarde envisions the euro expanding its international role amid shifting geopolitical dynamics and waning confidence in the US dollar. While the dollar remains the dominant global reserve currency, the euro, accounting for about 20% of reserves, is gaining momentum. Analysts express divergent views on the euro’s potential to challenge the dollar, citing political and economic hurdles facing Europe. Despite obstacles, growing investor interest suggests the euro could strengthen further.

European Central Bank Expected to Cut Rates: What This Means for the Eurozone Economy
European Central Bank Expected to Cut Rates: What This Means for the Eurozone Economy

The European Central Bank is set to reduce its deposit facility rate to 2%, responding to steady inflation and modest economic growth in the eurozone. Additional rate cuts are anticipated throughout 2025, although the ECB is expected to adopt a cautious, flexible approach without forward guidance. These moves will impact borrowing and savings rates differently, depending on financial product types and market expectations.

European Stocks Climb Amid Middle East Concerns; UK Retail Sales Dip Sharply
European Stocks Climb Amid Middle East Concerns; UK Retail Sales Dip Sharply

European stock markets climbed on Friday with the Stoxx 600 up 0.5%, led by travel sectors, while UK retail sales dropped sharply by 2.7% in May, breaking a four-month growth streak. Public borrowing in the UK edged higher, raising economic concerns. Meanwhile, Eutelsat shares surged 11% following a €1.35 billion government-backed capital raise. Gold prices slipped slightly but remain historically strong amid ongoing geopolitical tensions.

Pakistan Maintains Cryptocurrency Ban Amid Conflicting Signals From Officials
Pakistan Maintains Cryptocurrency Ban Amid Conflicting Signals From Officials

Despite announcements about establishing a Strategic Bitcoin reserve, Pakistan's central bank and finance ministry have clarified that all cryptocurrency transactions remain illegal. Lawmakers expressed concerns over conflicting policies that encourage crypto investments despite the ban, highlighting risks to financial stability and the need for regulatory clarity to prevent illicit activities.

Central Banks Boost Gold Reserves Amid Rising Global Uncertainty in 2025
Central Banks Boost Gold Reserves Amid Rising Global Uncertainty in 2025

In 2025, central banks globally are bolstering gold holdings as a hedge against economic and geopolitical uncertainties. Nearly 95% of reserve managers anticipate growth in gold reserves, driven especially by emerging markets prioritizing gold for value preservation and portfolio diversity. Additionally, there's a notable shift towards domestic gold storage and scaling back US dollar reserves in favor of alternative currencies.

Market Outlook: Rising Trade Tensions and Economic Indicators to Watch
Market Outlook: Rising Trade Tensions and Economic Indicators to Watch

U.S. markets saw robust gains in May, led by the S&P 500 and Nasdaq, buoyed by a temporary trade truce. However, recent U.S.-China tensions resurfaced following accusations of trade deal violations and a planned increase in steel tariffs to 50%. Asian markets responded negatively, and attention now shifts to Friday's U.S. jobs report for clues about economic momentum. Meanwhile, notable corporate mergers in Australia and shifts in bond market strategies highlight ongoing financial adjustments amid geopolitical uncertainties.

Inflation Data and Treasury Auctions Set to Challenge Bond Market This Week
Inflation Data and Treasury Auctions Set to Challenge Bond Market This Week

May’s inflation data and significant Treasury auctions this week put the bond market under scrutiny. While moderate inflation increases are expected, any surprises could unsettle investors. The sizeable sales of 10- and 30-year notes will reveal appetite for government debt as yields climb and fiscal debates continue. Market participants are watching these developments closely, as they could influence Federal Reserve policies and economic growth.

UK Finance Minister’s Spending Plans Spark Concerns Over Rising Borrowing Costs
UK Finance Minister’s Spending Plans Spark Concerns Over Rising Borrowing Costs

UK Finance Minister Rachel Reeves has proposed substantial increases in public spending on defense, healthcare, and infrastructure despite recent economic contraction. This has fueled concerns among economists and market experts about rising government borrowing costs, with gilt yields exceeding 5%. Analysts warn this could trigger a 'snowball effect,' where higher debt leads to surging interest payments and growing fiscal fragility. Political and market voices highlight limited fiscal headroom, potential tax hikes, and the challenge of managing debt servicing costs projected to reach £111 billion by 2026. While strategies to manage borrowing exist, such as altering gilt issuance, the government faces a delicate balancing act to maintain financial stability.

U.S. Treasury Yields Stabilize Following Sharp Declines Amid Weak Economic Data
U.S. Treasury Yields Stabilize Following Sharp Declines Amid Weak Economic Data

After steep declines driven by disappointing May manufacturing and payroll data, U.S. Treasury yields stabilized on Thursday. The manufacturing PMI fell below the expansion threshold, and private sector payrolls missed forecasts, raising concerns over labor market weakness. However, analysts consider the data insufficient to signal an imminent recession. Market attention now turns to the upcoming May non-farm payrolls and unemployment rate reports.

Stock Market Surges Amid Trade Progress and Inflation Data Watch
Stock Market Surges Amid Trade Progress and Inflation Data Watch

The U.S. stock market rallies for a third day, buoyed by a new trade framework between the U.S. and China and Tesla's driverless vehicle testing announcement. However, upcoming inflation data and Treasury auctions could challenge this optimism. Meanwhile, corporate layoffs and concerns over foreign investment outflows underscore economic caution.

Israeli Hackers Steal $90 Million from Iran's Nobitex Crypto Exchange
Israeli Hackers Steal $90 Million from Iran's Nobitex Crypto Exchange

A cyberattack by the Israeli group Predatory Sparrow has resulted in the theft of $90 million from Iran’s Nobitex cryptocurrency exchange. The hackers claim the platform helped Iran bypass sanctions. Meanwhile, Iran's state-owned Bank Sepah also suffered a cyber breach. These attacks reflect escalating cyber warfare tied to ongoing regional hostilities.

PM Modi’s Historic Visit to Croatia: Key Agreements in Agriculture, Science, and Culture
PM Modi’s Historic Visit to Croatia: Key Agreements in Agriculture, Science, and Culture

During his historic visit to Croatia, PM Narendra Modi signed four significant agreements with Croatian PM Andrej Plenkovic. These pacts focus on agriculture, science and technology collaboration, cultural exchange, and establishing a Hindi Chair at the University of Zagreb. The leaders also discussed advancing the India-EU Free Trade Agreement and expanding defense and startup partnerships, marking a new chapter in bilateral relations.