JGBs
Updated
Summary
Japanese government bonds (JGBs) are the yen debt securities issued by Japan's Ministry of Finance (MOF), from 2-year notes to 40-year bonds, plus short-term Treasury discount bills. Central government debt was about 1,346.7 trillion yen at end-June 2026, of which JGBs were 1,211.7 trillion yen. MOF plans 180.7 trillion yen of issuance in FY2026 (183.8 trillion after the June supplementary budget), mostly refinancing. The Bank of Japan (BOJ) is the largest holder, with 46.7% of JGBs at market value at end-June 2026, down from about 51% a year earlier as it shrinks its purchases. Banks, insurers and pension funds hold most of the rest; overseas investors hold about 8% of JGBs but over half of T-bills.
Key numbers
10-year / 30-year JGB yield (MOF constant maturity): 2.927% / 3.992% (October high 3.111% / 4.168%) (as of 2026-10-20). Source: mof.go.jp
2-year / 20-year / 40-year JGB yield: 1.909% / 3.723% / 4.002% (as of 2026-10-20). Source: mof.go.jp
Central government debt / of which JGBs: 1,346.7 trn yen / 1,211.7 trn yen (as of 2026-06-30). Source: mof.go.jp
BOJ share of JGBs (market value, excl. T-bills) / incl. T-bills: 46.70% (470 trn yen, -4.22 pts y/y) / 41.16% (as of 2026-06-30). Source: boj.or.jp
Overseas share of JGBs (excl. T-bills) / incl. T-bills: 7.94% / 13.12% (as of 2026-06-30). Source: boj.or.jp
BOJ planned monthly JGB purchases: about 2.3 trn yen (Oct-Dec 2026), 2.1 trn (Jan-Mar 2027), about 2 trn from April 2027 (as of 2026-06-16). Source: boj.or.jp
BOJ overnight call rate target: around 1.25% (from 2026-09-24) (as of 2026-09-18). Source: boj.or.jp
FY2026 JGB issuance: total / calendar-base market: 183.8 trn yen (revised; 180.7 initial) / 168.5 trn yen (as of 2026-10-21). Source: mof.go.jp
30-year auction 2026-10-08: average yield / bid-to-cover (AA arithmetic): 4.109% / about 3.88x; tail 1.2 bp (as of 2026-10-08). Source: mof.go.jp
FY2027 budget requests vs FY2026 initial budget: 143,066 bn yen vs 122,309 bn yen (+20,756 bn) (as of 2026-09-04). Source: mof.go.jp
Central and local long-term debt, end-FY2026 (budget estimate): about 1,344 trn yen, 194% of GDP (about 187% excl. front-loaded refunding bonds) (as of 2026-10-21). Source: mof.go.jp
Timeline
2026-10-20 — MOF yields: 10-year 2.927%, 30-year 3.992%, about 18 bp and 16 bp below their 2026-10-07 levels. (Source: mof.go.jp)
2026-10-08 — 30-year auction (issue 92, 4.2% coupon) clears at an average 4.109%; about 3.88x cover by AA arithmetic. (Source: mof.go.jp)
2026-10-07 — MOF 10-year yield 3.111% (its October high to date), 30-year 4.148%, 40-year 4.17%. (Source: mof.go.jp)
2026-10-05 — PM Takaichi's Diet policy speech: debt-to-GDP reduction a core priority, multi-year primary balance, controlled bond issuance. (Source: japan.kantei.go.jp)
2026-09-18 — BOJ raises the overnight target to around 1.25% (effective 2026-09-24), vote 7-2, citing oil, the Middle East and the yen. (Source: boj.or.jp)
2026-09-17 — BOJ Flow of Funds: BOJ share of JGBs falls to 46.70% at end-June, overseas 7.94%. (Source: boj.or.jp)
2026-09-04 — FY2027 budget requests total 143,066 billion yen, including a 12,173 billion yen investment framework. (Source: mof.go.jp)
2026-09-03 — 30-year auction (issue 91) clears at an average 4.079%, highest accepted 4.100%. (Source: mof.go.jp)
2026-08-10 — MOF: central government debt 1,346.7 trillion yen at end-June 2026. (Source: mof.go.jp)
2026-08-06 — 30-year auction average yield 3.937%, after 3.993% on 2026-07-07. (Source: mof.go.jp)
2026-06-16 — BOJ raises the target to around 1.0% and sets purchases at about 2 trillion yen a month from April 2027; holdings seen at 430-440 trillion yen by March 2028. (Source: boj.or.jp)
2026-05-25 — PM Takaichi announces an over-3-trillion-yen supplementary budget funded by deficit bonds; calendar market issuance later left unchanged. (Source: japan.kantei.go.jp)
2025-12-26 — MOF FY2026 issuance plan: 180.7 trillion yen total; 20-, 30- and 40-year issuance cut. (Source: mof.go.jp)
2025-12-19 — BOJ raises the overnight target to around 0.75% (effective 2025-12-22). (Source: boj.or.jp)
2025-06-17 — BOJ revises its taper: cuts slow to about 200 billion yen per quarter from April 2026, with a June 2026 interim assessment. (Source: boj.or.jp)
Key actors and links
Bank of Japan (actor:bank-of-japan): Largest JGB holder (46.7% at end-June 2026) and shrinking its purchases to about 2 trillion yen a month from April 2027; policy rate 1.25%.
Japan (country:japan): Issuer: central government debt of 1,346.7 trillion yen; MOF runs issuance and the PM sets the fiscal stance.
Japanese life insurers (actor:japanese-life-insurers): Main domestic super-long buyers; insurance and pension funds hold 18.3% of JGBs, a share down 1.4 points in a year.
Japanese yen (asset:jpy): JGB yields and BOJ policy shape yen rate differentials; the BOJ cited yen weakness when it hiked in September 2026.
USD/JPY (market:usd-jpy): Inference (AA): the US-Japan yield gap is one driver of USD/JPY; narrowing it can support the yen.
Yen carry trade (theme:yen-carry-trade): Inference (AA): higher JGB yields and BOJ hikes raise yen funding costs and the home return for Japanese savers.
Selling/repatriation pressure (theme:repatriation-flows): Inference (AA): 4% super-long yields give Japanese institutions a domestic alternative to foreign bonds; actual flows UNKNOWN here.
Sovereign debt burden (theme:sovereign-debt): Japan's central and local long-term debt is about 194% of GDP (budget basis, end-FY2026).
Quantitative easing / financialization (theme:quantitative-easing): JGBs were the core QQE asset; the BOJ's January-March 2026 buying was the lowest since QQE began in 2013.
Yield suppression (theme:yield-suppression): The BOJ keeps a backstop: it may raise purchases or run fixed-rate operations if long-term rates rise rapidly.
Energy-driven inflation pressure (theme:energy-driven-inflation): BOJ's Koeda says oil surges can lift Japan's long-term rates via inflation risk premiums.
Global bond markets (market:global-bonds): BOJ says Japanese long-term rates rose amid higher global rates; JGB moves also feed back into global duration.
U.S. Treasuries (market:us-treasuries): Inference (AA): Japanese investors are large Treasury holders, so JGB yield changes alter the relative appeal of Treasuries.
Fiscal consolidation (theme:fiscal-consolidation): Takaichi pledges a falling debt-to-GDP ratio and multi-year primary balance management while budget requests rise.
Why it matters now
JGB yields have reset upward as the BOJ exits both low rates and heavy bond buying. The BOJ raised its overnight target to 0.75% in December 2025, 1.0% in June 2026 and 1.25% in September 2026. Its monthly JGB purchases fall to about 2.1 trillion yen by early 2027 and then stay near 2 trillion yen, so its holdings shrink as bonds mature, to an expected 430-440 trillion yen by March 2028. MOF data put the 10-year yield at 3.111% and the 30-year at 4.148% on 2026-10-07, before both eased to 2.927% and 3.992% by 2026-10-20. The mechanism is supply and price: the largest buyer is stepping back while issuance continues, so private buyers must absorb more bonds and demand a higher term premium. MOF has cut super-long issuance (20-, 30- and 40-year sales each reduced by 100 billion yen per auction month in FY2026) to ease that pressure.
Fiscal policy is the second driver. Ministries requested 143.1 trillion yen for FY2027, about 20.8 trillion more than the FY2026 initial budget, including a new 12.2 trillion yen 'Strong and Prosperous Japan' investment framework. Prime Minister Sanae Takaichi calls her approach 'responsible and proactive public finances': she says the debt-to-GDP ratio must fall steadily, the primary balance will be managed over several years rather than year by year, and bond issuance will be controlled. Inference (AA): markets test that pledge through super-long auctions. The 2026-10-08 30-year auction cleared at an average 4.109% with about 3.9 times cover, so demand is present but at yields near records. Oil-driven inflation from the Middle East war pushes the same way through inflation risk premia, as BOJ board member Koeda noted on 2026-10-15.
Risks and open questions
Bull case: For JGB stability: the BOJ's taper is slow and predictable, with a stated backstop of extra purchases or fixed-rate operations if yields jump. MOF has cut super-long issuance and kept FY2026 calendar market issuance flat at 168.5 trillion yen even after a supplementary budget, and the PM has publicly tied her fiscal stance to market confidence, a falling debt ratio and controlled bond issuance. Auctions are being covered: the 30-year sale on 2026-10-08 drew about 3.9 times cover with a small tail. Domestic banks, public pensions and households are raising their shares as the BOJ steps back, and the 10-year and 30-year yields fell by about 16-18 basis points from 2026-10-07 to 2026-10-20. Inference (AA): at around 4% for super-long bonds, Japanese life insurers and pensions have a reason to buy at home, which supports demand at current levels.
Bear case: Against JGB stability: the largest holder is leaving. BOJ holdings are set to fall to 430-440 trillion yen by March 2028, so private investors must absorb more each year. FY2027 budget requests jumped about 20.8 trillion yen over the FY2026 initial budget, and a June 2026 supplementary budget was funded by deficit bonds despite the pledge to end reliance on such budgets. The BOJ has raised rates three times in ten months and says it will keep raising if its outlook holds, while oil prices from the Middle East war lift inflation risk premia. Debt of about 194% of GDP means higher yields raise interest costs over time as bonds refinance. Insurance and pension holdings are falling as a share. Inference (AA): if super-long demand weakens at a time of heavy refinancing, yields could reprice sharply, which the AA Japan energy thesis treats as an escalation signal.
Falsifiers: - Fiscal-supply pressure thesis fails if the FY2027 initial budget and issuance plan keep calendar market issuance at or below 168.5 trillion yen and 30-year yields fall below 3.8%. - Bear case fails if 30-year and 40-year auctions through March 2027 keep clearing with cover above 3x and tails of a few basis points. - Bull case fails if the BOJ has to use its backstop (extra purchases or fixed-rate operations) during the taper. - Bull case fails if the 10-year yield rises clearly above its October 2026 high of 3.111% after the BOJ's next hike. - Repatriation inference fails if MOF securities-flow data show Japanese investors adding to foreign bonds while super-long JGB yields stay near 4%. - Holder-shift claim fails if the next Flow of Funds shows the BOJ share of JGBs stable rather than falling.
Value accrual gate: Not a crypto asset. Higher JGB yields transfer value from the Treasury (higher interest costs over time) to new bond buyers, while existing holders, including the BOJ, banks and insurers, take mark-to-market losses. AA does not assume higher yields help or hurt Japanese equities or the yen; that depends on why yields rise.
What to watch
Liquidity enhancement auction for remaining maturities of 11-39 years: a read on super-long demand. (2026-10-27); Source: mof.go.jp
BOJ Monetary Policy Meeting and Outlook Report: rate path after 1.25% and any comment on long-term yields. (2026-10-29 to 2026-10-30); Source: boj.or.jp
30-year JGB auction (cover and tail) and 40-year auction. (2026-11-10 (30-year); 2026-11-25 (40-year)); Source: mof.go.jp
MOF central government debt as of 2026-09-30. (2026-11-10); Source: mof.go.jp
New floating-rate JGB linked to short-term rates and the wider Retail Government Bonds Plus offering. (January 2027 or later (retail offering December 2026)); Source: mof.go.jp
FY2027 draft budget and FY2027 JGB issuance plan: whether super-long sizes and calendar issuance stay flat. (late December 2026 (no scheduled date verified; FY2026 plan was published 2025-12-26)); speculative, no scheduled source
BOJ Flow of Funds Q3 2026: does the BOJ share keep falling and who buys? (mid-December 2026 (no scheduled date verified)); speculative, no scheduled source
AA inference
Inference (AA): JGBs are the graph's link between Japan's monetary exit, its fiscal choices and global duration markets. As the BOJ's share falls by about four points a year, the marginal buyer becomes domestic banks, pensions, life insurers and foreigners, who need higher yields. Higher JGB yields can raise the hedged return on staying home for Japanese institutions, which is one channel to yen carry and repatriation flows, though AA has no flow data proving such a shift now (UNKNOWN). AA watches three signals: super-long auction cover and tails, the BOJ's October and December decisions, and whether the FY2027 budget and issuance plan keep calendar issuance flat. The thesis that fiscal supply drives yields weakens if super-long auctions keep clearing near secondary-market yields while 30-year yields fall below 3.8%.
Sources
MOF constant-maturity JGB yields on 2026-10-20: 1-year 1.644%, 2-year 1.909%, 5-year 2.313%, 10-year 2.927%, 20-year 3.723%, 30-year 3.992%, 40-year 4.002% (semiannual compound, based on 3 p.m. Tokyo-time prices). (Source: mof.go.jp, accessed 2026-10-21)
MOF constant-maturity yields on 2026-10-07: 10-year 3.111%, 20-year 3.943%, 30-year 4.148%, 40-year 4.17%; on 2026-10-01: 10-year 3.092%, 30-year 4.122%, 40-year 4.125%. (Source: mof.go.jp, accessed 2026-10-21)
MOF publishes constant-maturity rates from secondary-market prices at the 3 p.m. close, released at 9:30 a.m. Tokyo time on the next business day, using JSDA reference prices. (Source: mof.go.jp, accessed 2026-10-21)
30-year JGB auction (issue 92, coupon 4.2%) on 2026-10-08: competitive bids 1,747.2 billion yen, accepted 450.7 billion yen, average yield 4.109%, highest accepted yield 4.121%. (Source: mof.go.jp, accessed 2026-10-21)
MOF announced on 2026-10-01 an offering of about 600 billion yen of 30-year JGBs for the 2026-10-08 auction, maturing 2056-09-20. (Source: mof.go.jp, accessed 2026-10-21)
30-year JGB auction (issue 91, coupon 4.0%) on 2026-09-03: competitive bids 1,728.1 billion yen, accepted 456.2 billion yen, average yield 4.079%, highest accepted yield 4.100%. (Source: mof.go.jp, accessed 2026-10-21)
MOF September 2026 JGB Newsletter: 30-year auctions cleared at average yields of 3.860% (2026-06-10), 3.993% (2026-07-07) and 3.937% (2026-08-06); the 40-year auction of 2026-07-22 had a lowest accepted yield of 3.865%; the 10-year lowest accepted yield rose from 2.656% (2026-06-02) to 2.900% (2026-08-04). (Source: mof.go.jp, accessed 2026-10-21)
MOF September 2026 JGB Newsletter: total FY2027 budget requests (released 2026-09-04) were 143,066 billion yen, against an FY2026 initial budget of 122,309 billion yen, including 12,173 billion yen under the 'Strong and Prosperous Japan' investment framework. (Source: mof.go.jp, accessed 2026-10-21)
MOF: central government debt was 1,346.7 trillion yen at 2026-06-30 (up 2.84 trillion yen on the quarter), of which JGBs 1,211.7 trillion, general bonds 1,110.9 trillion, FILP bonds 88.3 trillion and financing bills 94.4 trillion; released 2026-08-10, next release (end-September data) 2026-11-10. (Source: mof.go.jp, accessed 2026-10-21)
BOJ Flow of Funds, Q2 2026 (released 2026-09-17), market value: of 1,007 trillion yen of JGBs excluding T-bills, the BOJ held 470 trillion yen (46.70%, down 4.22 points from June 2025), insurance and pension funds 18.31%, depository corporations 14.23%, overseas 7.94%, public pensions 7.61%, households 2.18%. (Source: boj.or.jp, accessed 2026-10-21)
BOJ Flow of Funds, Q2 2026: including T-bills, government bonds totalled 1,142 trillion yen at market value; the BOJ held 41.16%, insurance and pensions 16.29%, depository corporations 14.88% and overseas investors 13.12%. (Source: boj.or.jp, accessed 2026-10-21)
MOF JGB investor presentation (August 2026), citing BOJ Flow of Funds for March 2026: of 1,150.1 trillion yen of JGBs and T-bills, the BOJ held 485.4 trillion (42.2%), banks 193.7 trillion (16.8%), foreigners 157.8 trillion (13.7%) and insurers 157.1 trillion (13.7%). (Source: mof.go.jp, accessed 2026-10-21)
MOF FY2026 JGB issuance plan: total issuance 180.7 trillion yen, calendar-base market issuance 168.5 trillion yen, refunding bonds 135.8 trillion; per-auction sizes 40-year 0.3, 30-year 0.6, 20-year 0.7, 10-year 2.6 trillion yen; 20-, 30- and 40-year issuance each cut by 100 billion yen per month. (Source: mof.go.jp, accessed 2026-10-21)
MOF revised FY2026 issuance plan after the supplementary budget: total issuance rises from 180,692.0 to 183,805.5 billion yen while calendar-base market issuance stays at 168,500.0 billion yen. (Source: mof.go.jp, accessed 2026-10-21)
MOF Public Finance Fact Sheet (April 2026): FY2026 general account 122,309.2 billion yen; new JGB issuance 29,584.0 billion yen (bond dependency 24.2%); interest payments 13,067.2 billion yen; central and local long-term debt about 1,344 trillion yen or 194% of GDP at end-FY2026 (about 187% excluding front-loaded refunding bonds). (Source: mof.go.jp, accessed 2026-10-21)
BOJ, 2026-06-16: monthly JGB purchases fall by about 200 billion yen per quarter to about 2.3 trillion yen in October-December 2026 and 2.1 trillion yen in January-March 2027, then about 2 trillion yen from April 2027; holdings are expected at about 480 trillion yen at end-March 2027 and 430-440 trillion yen at end-March 2028. Vote 7-1 (Tamura dissenting). (Source: boj.or.jp, accessed 2026-10-21)
The BOJ's 2026-06-16 purchase plan says that if long-term rates rise rapidly it may increase purchases, conduct fixed-rate purchase operations or use funds-supplying operations against pooled collateral. (Source: boj.or.jp, accessed 2026-10-21)
BOJ, 2025-06-17: purchases were to fall by about 400 billion yen per quarter to 2.9 trillion yen in January-March 2026 and by about 200 billion yen per quarter after that, with an interim assessment at the June 2026 meeting. (Source: boj.or.jp, accessed 2026-10-21)
BOJ, 2026-09-18: overnight call rate target raised to around 1.25% from 2026-09-24, vote 7-2; the BOJ cited underlying inflation approaching 2%, high crude prices and the Middle East situation, and yen depreciation. (Source: boj.or.jp, accessed 2026-10-21)
BOJ, 2026-06-16: overnight call rate target set at around 1.0% from 2026-06-17, vote 7-1. (Source: boj.or.jp, accessed 2026-10-21)
BOJ, 2025-12-19: overnight call rate target set at around 0.75% from 2025-12-22, unanimous. (Source: boj.or.jp, accessed 2026-10-21)
BOJ Market Operations in FY2025: the 10-year yield reached 2.35-2.40% in late March 2026, the highest since February 1999; the 30-year reached a record of about 3.8% and the 40-year about 4.2% in mid-January 2026; January-March 2026 purchases of 8.7 trillion yen were the lowest since QQE began in 2013; no fixed-rate purchase operations were carried out in FY2025. (Source: boj.or.jp, accessed 2026-10-21)
BOJ board member Koeda Junko, 2026-10-15: long-term rates reflect policy-rate expectations and risk premiums; surging crude oil can push up Japan's long-term rates through inflation concerns, and the bond supply outlook linked to fiscal factors also matters. (Source: boj.or.jp, accessed 2026-10-21)
Prime Minister Takaichi's 2026-10-05 Diet policy speech: 'responsible and proactive public finances' means growth and fiscal sustainability together; the government makes steady reduction of the debt-to-GDP ratio a core priority, manages the primary balance over multiple fiscal years, will 'appropriately control the total amount of government bonds issued' and will end dependence on supplementary budgets. (Source: japan.kantei.go.jp, accessed 2026-10-21)
Prime Minister Takaichi, 2026-05-25: an FY2026 supplementary budget of over 3 trillion yen, funded by deficit-financing bonds, for Middle East-related energy bill support and reserves, to be run 'without impacting the sovereign bond market' by adjusting planned issuance. (Source: japan.kantei.go.jp, accessed 2026-10-21)
MOF October 2026 auction calendar: 10-year on 2026-10-06, 30-year on 10-08, 5-year on 10-14, 20-year on 10-20, liquidity enhancement auctions on 10-22 (5-11 years) and 10-27 (11-39 years), 2-year on 10-29. (Source: mof.go.jp, accessed 2026-10-21)
BOJ home page (read 2026-10-21): overnight call rate target around 1.25%; next Monetary Policy Meeting 2026-10-29 and 2026-10-30. (Source: boj.or.jp, accessed 2026-10-21)