Japan Post Insurance eyes shorter JGBs as yields climb

what happened

Japan Post Insurance, also known as Kampo, stated on Monday that higher yields now make shorter-maturity Japanese government bonds appealing. The insurer is ready to consider JGBs across the full maturity range instead of focusing only on long-dated issues.

Executive officer Hiroyuki Nomura explained that when rates were negative, the company could only buy longer bonds. "Finally, we see opportunities in the three-year JGBs, the five-year JGBs or those with any maturities," he said. In the first half of the year the firm sold low-coupon bonds and bought high-coupon ones, but its overall buying pace was slower. It could pick up in the second half.

The insurer sees the 10-year JGB yield around 3% and the 30-year yield around 4% for the second half. It expects the Bank of Japan to raise rates in December and again in March.

why it matters

For the JGB market, this signals that a large institutional buyer is willing to extend purchases beyond the long end of the curve. Expected BOJ tightening aimed at containing inflation keeps demand for short bonds in focus.

market impact

JGB market: institutional demand shifts toward shorter maturities, supporting short-dated Japanese government bonds

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