The Bank of Japan's holdings of Japanese government bonds fell 8.7% over the past year to 503.4 trillion yen, but its stock of super-long debt kept growing, according to issue-by-issue figures the central bank released on Wednesday, Nov. 4.

The split matters for investors in Asia because super-long JGBs, the 20-, 30- and 40-year bonds, reached yields this year not seen in decades. The figures show the BOJ's retreat is happening mostly at shorter maturities, which leaves more of the long end to private buyers such as life insurers and foreign funds. The 20-year yield's climb to around 4% in October fueled talk that Japanese investors might repatriate funds, with possible knock-on effects for U.S. Treasuries and the dollar-yen rate, Nikkei Asia reported.

Bank of Japan runoff hits two-, five- and 10-year bonds

At face value, the BOJ held 503.4 trillion yen of interest-bearing JGBs as of Oct. 30, down from 551.4 trillion yen at the end of October 2025. Capital Times added up the totals from the bank's lists of holdings by issue, which include bonds bought in market operations and those acquired in dealings with the government.

The shorter end accounts for more than the entire 48 trillion yen drop. Holdings of two-year bonds fell 42% to 11.7 trillion yen. Five-year holdings dropped 17.7% to 75.3 trillion yen, and 10-year holdings fell 10.5% to 219.7 trillion yen.

As a group, bonds first issued with maturities of 20 years or more went the other way. The bank's 30-year holdings rose 5.5% to 53.3 trillion yen, and its 40-year holdings climbed 8.5% to 11.6 trillion yen. Twenty-year holdings slipped 1.2% to 125.4 trillion yen. Together, the three types grew 1.1% to 190.3 trillion yen and made up 37.8% of the portfolio, up from 34.1% a year earlier.

Short-dated bonds mature quickly, so slower buying shows up there first. The BOJ still buys across the curve. Its schedule for October and November sets outright purchases at about 2.3 trillion yen a month, including roughly 170 billion yen of bonds with 10 to 25 years left to maturity and 150 billion yen with more than 25 years left. One offer in that longest bucket was set for Wednesday. The shrinking of the bank's broader balance sheet also shows in October's monetary base data, released the same day.

Super-long JGB supply keeps coming

Those purchases are small next to new issuance. The Ministry of Finance plans to sell about 600 billion yen of 30-year bonds on Nov. 10, reopening the October issue, and has scheduled 20-year and 40-year auctions for Nov. 18 and Nov. 25. It sold about 700 billion yen of 20-year bonds in October. The month's calendar also includes about 2.6 trillion yen of 10-year bonds, scheduled for auction on Thursday, Nov. 5.

Buyers have been taking that supply at lower yields than a month ago. The 30-year yield was 3.94% on Monday, Nov. 2, down from 4.168% on Oct. 6, Ministry of Finance data show. The 20-year yield fell to 3.669% from 3.946%, and the 10-year yield eased to 2.817% from 3.111% on Oct. 7. A year earlier, the 30-year bond yielded about 3.1%.

October's auctions drew steady demand. Competitive bids at the Oct. 8 sale of 30-year bonds were about 3.9 times the amount accepted, at an average yield of 4.109%, and the Oct. 20 sale of 20-year bonds drew bids of about 5.8 times. On Nov. 2 the ministry sold 249.8 billion yen of five-year climate transition bonds at a 2.2% yield, against bids of 959.9 billion yen.

Insurers and foreign funds test the long end

Private demand has picked up. Japanese life insurers have been net buyers of super-long government bonds for four months, and overseas investors for three straight months, Bloomberg reported on Oct. 29, citing Japan Securities Dealers Association data for the foreign flows. T. Rowe Price, Allianz Global Investors and BNP Paribas Asset Management have all shifted toward longer-dated JGBs, the report said.

“We have become more constructive on JGB duration,” said Mark Tay, chief investment officer for fixed income in Asia Pacific at AllianzGI, according to Bloomberg.

Some of Japan's biggest domestic buyers are moving cautiously. Meiji Yasuda Life and Dai-ichi Life are looking to expand their domestic bond holdings, Nikkei Asia reported on Oct. 27. A second Nikkei Asia report, on Nov. 2, found insurers sticking with diversified portfolios in their second-half investment plans, so any return of money to JGBs is likely to be gradual.

Bloomberg's report named fiscal policy as the biggest obstacle to a lasting rally. Shoki Omori, chief Japan fixed-income strategist at Deutsche Securities, warned that a bigger supplementary budget, or a fiscal 2027 issuance plan that does not cut super-long supply further, could reverse the recent narrowing between short- and long-dated yields. Investors are watching how the government of Prime Minister Sanae Takaichi will pay for a proposed cut in the sales tax on food and higher defense spending, the report said.

The next checkpoints are close together. On Nov. 10, the day of the 30-year auction, the BOJ publishes the summary of opinions from its October policy meeting. The bank will announce its December purchase dates on Nov. 30, meets on Dec. 17 and 18, and is due to publish its January to March 2027 purchase schedule on Dec. 25.