Over a year after Japan increased yields enough to attract global bond managers, many are now reducing their exposure to long-dated Japanese government bonds (JGBs) as concerns grow over policy risks and inflation pressures [1, 2].
Investment firms including T. Rowe Price Group, Schroders, and Brandywine Global Investment Management have recently decreased their holdings or shifted to tactical positions in these long-duration bonds [1, 2]. April 2026 data showed overseas investors sold more superlong Japanese debt than they bought for the first time since 2024 [1, 2].
The retreat reflects worries that the Bank of Japan (BOJ) will not tighten monetary policy quickly enough to manage inflation and stabilize the bond market. Although the BOJ is expected to announce an interest rate hike around June 16, 2026, many investors view the anticipated move as too slow and gradual [1, 2].
Investors cite persistent inflation, sluggish normalization of BOJ policy, and ongoing fiscal supply pressures as increasing duration risks for holding long-dated Japanese bonds [2]. The long-term Japanese bond market appears to be transitioning from a period of low volatility and low yields to one characterized by higher yields and increased price swings [2].
In 2024, global investors last net sold superlong JGBs before returning to net buying, but the net selling in April 2026 marks a key turning point [1, 2]. The coming BOJ policy meeting in mid-June will be closely watched for any signs of a more decisive shift in the central bank’s stance [1, 2].
