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2026-02-16 14:33:30
[Goldman Sachs: Japanese Government Bond Yield Curve Has Removed Country Risk Premium, Long-Term Yields Return to Fair Value] ⑴ Goldman Sachs analysts pointed out in a report that the current Japanese government bond yield curve no longer contains any "country risk premium." They stated that the 10- to 30-year government bond portion has now returned to fair value, while the 2- to 10-year government bond yield curve is only 10-15 basis points steeper than fair value. ⑵ Analysts stated that the recent elimination of uncertainty surrounding the House of Representatives election may have been sufficient to eliminate some of the long-term risk premium. However, last week's price action "seems to have gone beyond the influence of this single factor, making the market more inclined to believe that the government and the Bank of Japan have the ability to address 'bad' fiscal tail risks." ⑶ From a market perspective, Goldman Sachs' judgment implies that investor confidence in the sustainability of Japanese finances is recovering, and the decline in long-term yields reflects the fading of the risk premium rather than a simple change in monetary policy expectations. ⑷ The market should pay attention to the pace of the Bank of Japan's subsequent monetary policy normalization and the actual progress of the government's fiscal consolidation measures. If market confidence in the tail risk of "bad" assets is maintained, the Japanese government bond yield curve is expected to stabilize around current levels.
