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[Japanese Bond Market Quietly Recovers, Overseas Funds Take Advantage of the Plunge to Buy] ⑴ Japanese government bonds strengthened across the board on Friday, with the 10-year spot bond yield falling 3.5 basis points to 2.105%, a new low since January 9. The futures market performed even stronger, with the main contract surging to an intraday high of 132.81. Market participants pointed out that the current rise is partly due to the weakening of selling momentum. ⑵ Last month's sharp sell-off was triggered by tax cut promises, but Prime Minister Sanae Takaichi now seems to be intentionally avoiding triggering another bond market turmoil. It is worth noting that, according to the latest data from the Japan Securities Industry Association, overseas accounts and large banks did not amplify fiscal concerns during last month's yield surge, but instead viewed it as a golden buying opportunity. ⑶ Overseas funds showed a net buying trend across the board in January. Data shows that foreign investors made net purchases of 2.17 trillion yen in ultra-long-term government bonds, the largest scale since April last year; net purchases of long-term government bonds were 1.59 trillion yen, and net purchases of medium-term government bonds were 2.27 trillion yen. Large banks also net bought 1.33 trillion yen of long-term government bonds, but were net sellers of medium-term government bonds for the third consecutive month. (4) Insurance institutions and regional banks chose to operate in the opposite direction, becoming net sellers of ultra-long-term government bonds. This divergence reflects significant differences in how different investors assess duration risk and yield levels. (5) In today's market, the selling of 20-year government bonds from the central public account was successfully absorbed in the morning, indicating strong market demand. In the afternoon, older bonds with maturities of 14 to 18 years received buying support, with the yield on JL184, maturing in March 2043, falling by 7 basis points from the previous day. (6) Liquidity factors amplified price volatility in some periods. The trading volume of the new 10-year bond JB381 was only 8 billion yen in the morning. Traders said that its yield falling below 2.10% reflected more the price amplification effect under sparse trading than a trend breakout. Subsequently, the yield rebounded and remained above 2.10%. (7) The interest rate market's pricing of the Bank of Japan's policy remained stable. The probability of an interest rate hike at the March meeting remained at 12.5%, while the probability of an interest rate hike at the April meeting rose to 69.5%, a slight increase from the previous day. The Nikkei 225 index fell 642 points, or 1.12%, to close at 56,825. The yen exchange rate remained around 155.17.