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Investing.com -- In response to recent sharp increases in yields for super-long bonds, Japan is contemplating reducing the issuance of these notes, according to Reuters. This consideration is part of an effort by policymakers to alleviate market worries about the deteriorating state of government finances.
The news of this potential move led to a slump in super-long bond yields, which in turn caused a drop in the Japanese yen and U.S. Treasury yields. This reaction indicates the market’s positive response to Tokyo’s readiness to curb increases in long-term interest rates.
The Ministry of Finance (MOF) in Japan is considering revising the composition of its bond program for the current fiscal year. This revision could entail a reduction in the issuance of super-long bonds, according to the sources who have direct knowledge of the plan. The MOF will make a decision following discussions with market participants, which are expected to take place from the middle to the end of June.
This plan is being developed in the context of a recent surge in super-long bond yields to unprecedented levels. This surge is due to a decrease in demand from traditional buyers such as life insurers, as well as concerns in the global market over steadily increasing debt levels.
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