Super-long JGB supply-demand concerns: Sluggish domestic demand, foreign investor trends
Key points
- Steepening of super-long JGB yield curve due to supply-demand concerns; domestic investors unlikely to be major buyers of super-long JGBs
- Foreign investors also unlikely to drive demand; over short term we expect headwinds from unrealized losses, July Upper House election; hard to view foreign investors as steady buyers even over long term
- 10s30s JGB spread likely to narrow if large-scale economic stimulus measures avoided or interest rate hikes resume, but we see holdings to remain at relatively high level
