Ruisui: The market situation of "buyer strike" in Japanese bonds will come to an end after the weekend elections, and institutions are waiting for the yield to reach a "buying point".

According to strategists at Mizuho Bank, investors may return to the longer-term Japanese government bond market after this weekend's early election, and major asset management institutions believe that a trigger point for buying may be when the 10-year Japanese government bond yield reaches 2.5%. Jordan Rochester, the head of macro strategy at Mizuho Bank in London, said, "With the uncertainty of the election being removed, we see the super-long buyer strike rallying coming to an end soon." He also added that some of Japan's largest investors are waiting for a slight increase in yields. Rochester stated that during his recent trip to Tokyo, life insurance companies, asset management companies, and banks almost unanimously agreed that the 10-year Japanese government bond yield rising to around 2.5% would be a good buying opportunity. Currently, the yield is hovering around 2.25%. Before Prime Minister Sanae Takaichi announced the early election, long-term government bond yields in Japan rose, with the 10-year Japanese government bond yield climbing to 2.38% last month, its highest level since 1999. If Sanae Takaichi can consolidate her support through the election, this will pave the way for increased spending to stimulate the economy. Some Japanese domestic investors have been avoiding the long-term bond market due to concerns that fiscal worries may push up yields, compounded by increased market volatility. Life insurance companies and pension funds have traditionally been the largest buyers of long-term and super-long-term Japanese government bonds, and their absence has weakened the anchor of demand, although foreign investors have somewhat filled this gap. Next Thursday will be another test of demand for super-long-term Japanese government bonds, as the Japanese government will issue around 700 billion yen (approximately $4.5 billion) worth of 30-year Japanese government bonds. Japan has been reducing the issuance of long-term government bonds to address declining demand. Rochester believes that, given that the Bank of Japan has set the neutral interest rate target range at around 1% to 2.5%, the 10-year Japanese government bond yield could climb to 3% by the end of the year. He stated that increased demand for higher-term premium government bonds, as well as Japan's economic recovery from decades of deflation, will also push up yields.