Analysts: Steep curve of Japanese government bonds attracts investors to extend duration; ultra-long-term premiums may be too high.

Jin10 data reported on October 8, analysts at DBS Group Research, led by Eugene Leow, stated that the steep yield curve of Japanese government bonds may attract investors looking to tactically increase duration exposure. The senior interest rate strategist pointed out that the yield difference between the 10-year and 30-year Japanese government bonds is currently close to 160 basis points, which is at a high level. He believes that this steep trend largely reflects the market's view — that Japanese authorities may be more concerned with the yield fluctuations of bonds with maturities of 10 years and below. However, we believe that the yield premium on ultra-long government bonds may be too high, Eugene Leow said. He added that the results of Tuesday's auction of 30-year Japanese government bonds showed that if yields are high enough, investors are willing to take on long-term risk.