40-year JGB yield hits 4% as Foreign Buyers Seize Control of Japan's Bond Market

A tectonic shift just rocked the world's third-largest bond market. On January 20, 2026, the yield on 40-year Japanese Government Bonds (JGBs) surged past the 4% mark. For the first time ever, foreign players acquired the majority of these superlong bonds, stepping in as domestic institutional investors retreated from rising yields.

Cracking the 40-year JGB yield 4% Barrier

The latest auction by Japan's Ministry of Finance met with tepid interest from local banks and insurers. According to Nikkei, overseas buyers have officially taken the lead in the superlong segment. It's a clear sign that the era of 'home-grown' debt dominance is fading as domestic portfolios brace for higher interest rates.

Fiscal Jitters Ahead of Snap Election

Political instability is fueling the sell-off. With a snap election called for February 8, candidate Takaichi's proposal for sales tax cuts has sent shockwaves through the market. This fiscal uncertainty hasn't just affected the long end; the 10-year JGB yield also hit a 27-year high of 2.2%, reflecting deep-seated concerns over Japan's fiscal trajectory.