Funds are shifting into retail JGBs as the Bank of Japan’s 1.25% policy rate takes hold. October sales totaled ¥1.0251 trillion, bringing cumulative sales to ¥6.1641 trillion and putting them above the initial plan.
Following the Bank of Japan’s rate hike to around 1.25%, funds have been flowing actively into retail JGBs. Sales of the Ministry of Finance’s October issue totaled ¥1.0251 trillion, bringing cumulative sales for fiscal 2026 to ¥6.1641 trillion, above the initial plan of ¥5.9 trillion. Annual sales are running at a pace above the fiscal 2005 record of ¥7.2712 trillion, and could exceed ¥10 trillion a year going forward.
The end of the ultra-low interest-rate environment is cited as a factor, while yields on government bonds have attracted attention as an alternative to deposits and savings, with the applicable rate on floating-rate 10-year bonds reaching above 2%. Market participants analyze that the rise in interest rates will strengthen the flow of funds from deposits. On the policy front, the inclusion of tax advantages for individual government bonds in the requests for fiscal 2027 tax reform is under consideration.