Big Risks Hound Japan’s Longest Bonds Despite Move to Cut Supply

-- Japan’s super-long bond issuance looks set to drop, but it’s a case where less still means more than the market may be able to handle.BlackRock Deal to Make Preqin’s Founder Richer Than Larry Fink

The stark challenges facing Japan’s policymakers underscore the difficulty of exiting decades of radical stimulus and making Bank of Japan policy ‘normal.

“There is an oversupply of super-long bonds,” said Ayako Sera, a market strategist at Sumitomo Mitsui Trust Bank Ltd. in Tokyo. “The BOJ’s purchases have been providing some anchoring for their yields, but that anchor is about to come loose.” Still, uncertainty over how much the BOJ will decrease its bond buying and elevated inflation in Japan partly fueled by the weak yen mean any rally in super-long debt may be short-lived.

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