Core Points - The Japanese Ministry of Finance is coordinating to include approximately 30 trillion yen in the 2026 budget application for "debt service," which is expected to exceed the record high of 28.2179 trillion yen in the 2025 original budget [1] - To address the rising trend of long-term government bond yields, the Ministry plans to significantly raise the assumed interest rate for calculating interest payments from 2.1% in the previous year to approximately 2.6% [1] - The yield on new 10-year Japanese government bonds has been continuously rising this year, reaching 1.615% on August 22, marking a 17-year high [1]

Core Viewpoint - Long-term government bond yields in China have been declining, with the 30-year yield falling below 2.5%, reflecting expectations of long-term economic growth and inflation, while also being influenced by supply and demand factors [1][2]. Group 1 - The People's Bank of China (PBOC) maintains a positive long-term outlook on economic growth, asserting that the fundamental economic conditions remain favorable [1]. - Some institutional investors anticipate a moderate recovery in inflation from low levels, which could support an increase in long-term bond yields as nominal rates adjust to inflation [1]. - The bond market in China has made significant progress, ranking second globally in total size, but still requires improvements in market depth and pricing mechanisms [1]. Group 2 - A noticeable reduction in government bond supply this year may have contributed to the short-term divergence between bond yields and economic expectations [2]. - The PBOC's strong counter-cyclical monetary policy has created a favorable liquidity environment for the stable operation of the bond market [2]. - The issuance of ultra-long-term special government bonds is expected to alleviate the "asset shortage" situation, leading to a potential rebound in long-term bond yields [2]. Group 3 - The PBOC's engagement in secondary market bond trading serves as a liquidity management tool and a reserve for monetary policy [3]. - China's bond market ranks third globally, with improved liquidity facilitating the PBOC's operations in the secondary market [3]. - Unlike developed economies that resorted to large-scale bond purchases for monetary policy goals, China continues to implement normal monetary policy, distinguishing its approach from quantitative easing (QE) practices [3].

Group 1 - Long-term government bond yields have been on a downward trend, with the 10-year bond yield closing at 2.2727% on April 24, showing a significant rebound from the previous day, but overall remaining below 2.3% since April 2 [1] - The 30-year bond yield also closed at 2.4791% on April 24, reflecting a similar pattern of decline, remaining below 2.5% since March 18 [1] - The decline in long-term bond yields is attributed to increased demand for ultra-long bonds amid expectations of a bull market in bonds, leading to a sustained downward trend in yields [1] Group 2 - The People's Bank of China indicated that long-term bond yields reflect expectations of long-term economic growth and inflation, but are also influenced by supply and demand factors [2] - Economic fundamentals remain strong, with the GDP for the first quarter reported at 29.6299 trillion yuan, a year-on-year growth of 5.3%, exceeding market expectations [2] - The issuance of ultra-long special government bonds is expected to alleviate the "asset shortage" situation, potentially leading to a rebound in long-term bond yields [2] Group 3 - The Ministry of Finance plans to coordinate the issuance of ultra-long special government bonds based on project allocation and market demand, ensuring a reasonable match between bond terms and project timelines [3] - Approximately 38,000 special bond projects have been approved for 2024, with a demand of around 5.9 trillion yuan, laying a solid foundation for the issuance of 3.9 trillion yuan in special bonds this year [3] - The anticipated increase in special bond supply and the potential issuance of ultra-long special government bonds may lead to adjustments in the supply-demand dynamics of the bond market [3]