Japan Considers Reducing Super-Long Bond Issuance Amid Rising Yields

Japan is considering reducing the issuance of super-long government bonds amid record-high yields, driven by decreased demand from institutional investors and concerns over the country's fiscal health. The Ministry of Finance plans to maintain the overall bond issuance target for the fiscal year but may shift focus toward shorter-dated debt to ease upward pressure on yields. This potential adjustment follows warnings from government advisory panels highlighting the risks of rising debt-servicing costs as the Bank of Japan tightens monetary policy by raising interest rates and scaling back bond purchases. The panels also caution against tax cuts to address inflation, advocating instead for sustained wage growth and economic revitalization to maintain fiscal sustainability and avoid unexpected spikes in interest rates. The decision on bond issuance adjustments is expected after consultations with market participants in mid to late June. Japan's loss of status as the world's largest creditor nation to Germany further underscores the changing dynamics in its financial position.