All Japanese bonds have a yield under 0.3% as of April 19.

  • Yield on the 40-year bond fell to a record low 0.29%.
  • Yield on the 30-year bond hit a record low 0.285%
  • Japan’s two-year bond yield hit a record low minus 0.265 percent.

Please consider All Japan Sovereigns Yield Below 0.3% as 40-Year Hits Record Low.

Japan’s 40-year bond yield fell to a record low, meaning all the nation’s sovereign bonds yield less than 0.3 percent as investors rush for securities with positive income.

The yield on the 1.4 percent government note maturing in March 2055 fell to 0.29 percent in Tokyo Wednesday from 0.415 percent on Friday when the bond had last traded, according to Japan Bond Trading Co. The decline spread to other longer-dated maturities, pushing 30- and 20-year yields to record lows of 0.285 percent and 0.245 percent respectively. Japan’s two-year yield also reached a record minus 0.265 percent.

Bond-buying operations for these zones by the Bank of Japan are also tightening market conditions as negative rates have pushed investors seeking positive yields into longer-dated debt. Yields on bonds with maturities as long as 10 years have gone negative since the BOJ announced in January that it would start charging lenders on some of their excess reserves held with the central bank.

‘No Choice’

“With yields up to 10 years sinking below zero, investors will look at zones on the curve with plus yields,” said Makoto Yamashita, a strategist for Japanese interest rates at Deutsche Bank AG’s securities unit in Tokyo. The 20-year auction scheduled for Thursday is expected to meet healthy demand, he said. “There are investors who have no choice but to buy.”

“Strong demand for these bonds is strengthening downward pressure on their yields,” said Takafumi Yamawaki, the chief rates strategist in Tokyo at JPMorgan Chase & Co. There is also “speculation among some overseas investors of additional easing by the BOJ,” he said.

Bank of Japan Corners 33% of Bond Market

Bloomberg reports Japan Keeps Borrowing as Yields Hit Record Low.

For Japan’s bond investors, it seems the bigger the debt burden, the better.

Yields on some of Japan’s longest sovereign notes dropped to records as ruling party lawmaker Kozo Yamamoto floated on Thursday the idea of borrowing an extra 20 trillion yen ($182 billion) to fund earthquake relief and bolster a struggling economy. With most of the nation’s bonds offering negative yields and the Bank of Japan cornering a third of the market as part of its unprecedented stimulus, strategists say the government with the world’s biggest debt pile will have no trouble selling more as investors hunt any notes that can be traded and offer a return.

Japanese debt yields have slid to record lows as the BOJ buys nearly all the government notes newly issued to the market. All benchmark yields up to 10-years are below zero, and the 30-year yield dropped to an all-time-low of 0.265 percent on Thursday while the 40-year rate fell to a record 0.29 percent a day earlier.

An auction of 1.1 trillion yen of 20-year JGBs on Thursday drew the strongest demand since November, in a sign that investors are still keen to acquire Japanese notes with positive yields.

Yamamoto of the Liberal Democratic Party, who had been calling for a 10 trillion yen fiscal package before temblors struck Japan’s southwest, also said Thursday that he personally thinks the BOJ should boost monetary stimulus. The central bank’s policy board next meets for two days through April 28.

Desperate Measures Needed

Try as it might, Japan has failed to trash its currency.

Proof is obvious: negative rates on 10-year bonds and 40-year bonds yielding a mere 0.29 percent.

Abenomics has failed.

Mike “Mish” Shedlock