Japan’s longer debt attractive for foreigners, Morgan Stanley says

Link copied

Japan’s longer debt attractive for foreigners, Morgan Stanley says.

treasuries & bonds :: 2025-06-11 :: source - bloomberg

By Mia Glass and Haidi Lun

(Bloomberg) — Foreign investors are looking with interest at longer-term Japanese bonds, while it remains uncertain when the government will adjust how much of the debt it sells, Morgan Stanley (MS) says.

Most Read from Bloomberg

“You still have a tremendous amount of supply hitting the long-end of the Japanese government bond market, which is presenting value for investors outside of Japan” from Canada to Europe to Asia, the firm’s global head of macro strategy Matthew Hornbach said on Bloomberg Television.

“The Ministry of Finance, which has a slower cadence in how it adjusts its issuance program, will eventually get the message from the investor community that it needs to pare back its issuance, but exactly the time frame for that is unclear,” Hornbach said.

Yields for Japan’s 30-year and 40-year government bonds have recently scaled new heights as the central bank pulls back from its massive bond-buying program and major Japanese financial institutions fail to fill in the gap. But global funds bought a record amount of Japan’s super-long government bonds in April for a third straight month.

There is speculation that Japan will adjust its issuance or buy back some of the debt to calm investor nerves.

Hornbach said he expects long-term US Treasury yields and the dollar to move lower over time as the negative impacts of tariffs start coming through more clearly. He added that even if Japan’s bonds can’t hold down yields globally, central bank policies around the world should eventually bring down yields.

“Japanese government bond yields, for the large majority of my career in markets, were seen as the anchor point for global duration,” Hornbach says. “Even though Japanese government bonds may no longer be considered the global anchor for bond markets, other central banks are acting in ways that I think ultimately lead to lower interest rates around the world.”