Japanese government bonds have once again gained prominence in the financial market after yields reached their highest levels in several decades. The increase is the result of the normalization of the Bank of Japan’s (BoJ) monetary policy, which ended the period of ultra-low interest rates and began allowing a gradual rise in market rates.
Last week, the yield on the 10-year bond reached 2,9%, the highest level since 1996. 20-year bonds also renewed highs, reflecting expectations of higher interest rates and concerns about the Japanese government’s fiscal policy.
For some analysts, this scenario marks an important change. After years of offering returns close to zero, Japanese bonds are once again providing remuneration considered attractive for global investors.
State Street Investment Management assesses that Japanese fixed income has once again become a relevant alternative for portfolio diversification. Meanwhile, consultancy Gavekal states that long-term bonds may perform well if yields decline and the yen strengthens in the coming months.
Not everyone shares this optimism. Asset manager DWS considers that European bonds still offer a more interesting risk-return ratio, highlighting Japan’s high public debt, which exceeds 200% of Gross Domestic Product (GDP), as a factor requiring attention.
Despite the disagreements, international interest in Japanese bonds has grown again. Market data show a strong inflow of foreign capital into long-term securities throughout 2026, driven by higher yields.
The movement is also beginning to alter the global flow of investments. With better opportunities in the domestic market, Japanese investors reduced positions in United States Treasury bonds, favoring the repatriation of resources.
Experts assess that the Bank of Japan’s next steps, the evolution of inflation, and the government’s fiscal policy will be decisive in determining whether the recovery of the bond market will continue in the coming months.