宏观深度报告：日债利率新高之后：风险与机遇

Group 1: Reasons for Rising Japanese Bond Yields - The 10-year Japanese bond yield has reached a new high of 1.63%, the highest since 2008, driven by multiple factors including weak bond auction results and reduced demand from life insurance companies[6][7]. - The bid-to-cover ratio for the 20-year bond auction on May 20 was 2.50, significantly lower than the previous auction's 2.96, indicating waning investor interest[11]. - Japanese life insurance companies, holding 17% of government bonds, are reducing long-term bond allocations due to substantial unrealized losses, with one major insurer reporting a loss of 3.6 trillion yen in FY2024[13]. - Political instability following the ruling party's loss in the July 20 elections has exacerbated bond sell-offs, leading to increased market uncertainty[17]. Group 2: Outlook and Risks - The Japanese bond yield is expected to continue rising over the next six months to a year, primarily driven by domestic inflation and interest rate hike expectations, with potential increases of over 50 basis points if the policy rate reaches 1%[30][36]. - The Japanese government debt-to-GDP ratio is projected to remain high at 237%, raising concerns about fiscal sustainability amid rising interest rates[27]. - Risks include a potential debt spiral as rising yields increase debt servicing costs, and the possibility of a "carry trade" unwind, which could lead to market volatility[6][30]. Group 3: Opportunities in Japanese Bonds - The attractiveness of Japanese bonds is increasing as yields rise, making them a viable investment option amid a backdrop of improving economic fundamentals and fiscal outlook[6][30]. - Japan's economy is on a path to recovery, with stable employment and a positive inflation outlook, which supports the long-term investment case for Japanese bonds[6][30]. - Global diversification needs are rising, positioning Japan's bond market as an attractive alternative for investors seeking options beyond the U.S. and European markets[6][30].