Japan ' s demand for 40-year-old national debt auctions has been high since March 2025

On 22 July, Japan ' s 40-year national debt auction attracted the strongest demand since March 2025 and investors attracted higher rates of return. The tender for the Wednesday auction was 2.82 times greater, 2.702 times higher than the previous auction and 2.55 times higher than the average for the last 12 months. Upon the conclusion of the auction, the prices of Japan ' s national debt were almost equal. Recent statements by Japanese government officials have highlighted the importance of a large government pension investment fund to increase investment in domestic financial assets, a statement that underpins Japanese domestic debt. The rate of return on the 40-year-old national debt currently hovers around 3.895 per cent, after reaching a historical high of 4.355 per cent in May. Some investors, however, remain concerned about Prime Minister Takahashi’s expansionary fiscal policy agenda, the expectation that the Central Bank of Japan will slow down interest rates, and still large interest rate differentials. Kim Xian