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2026-02-18 18:45:40
[Japanese Government Bond Futures Rally Then Fall Back; Demand for Ultra-Long-Term Bonds Supported by Accounting Standard Changes] ⑴ On Wednesday, Japanese government bond futures surged in the morning session, reaching an intraday high of 132.96, but subsequently gave back gains, ultimately closing lower. Market participants attributed the morning's rise to technical factors, while the afternoon's decline was related to the Bank of Japan's routine bond-buying operation, which showed market participants tended to sell long-term bonds. ⑵ The central bank's bond-buying results showed strong selling pressure on long-term government bonds, putting pressure on 5- to 10-year bonds. Futures weakened after the afternoon session resumed, briefly dipping to 132.38. The market is preparing for tomorrow's 20-year government bond auction, with some public accounts already placing buy orders during the session. ⑶ In contrast to the weakness in medium- and long-term bonds, 24- to 27-year non-newly issued ultra-long-term bonds performed strongly. The market attributed this to a draft accounting standard released yesterday by the Japan Institute of Certified Public Accountants. If the draft is finalized, life insurance companies will have less need to write down their bond holdings when the price falls to half of the purchase price. (4) This potential change in accounting standards could reduce selling pressure on insurance institutions during market downturns, thus providing structural support for ultra-long-term bonds. Analysts believe that, as a result, tomorrow's 20-year Treasury bond auction may proceed more smoothly than some expectations.
