With Japanese government bond yields at a paltry 0.6%, far lower than even the 1.5% on offer back in 2007, Japanese retail buyers may have finally had enough. Bond sales to households have missed estimates by a wide margin.
Investing In Japan: The MoF now only expects to raise Y1.3 trillion (US$14.3B) this year from individual investors, down from a prior estimate of Y2.4 trillion, and considerably lower than the record Y7.2 trillion raised in ’05.
Through the end of this September, individual investors held Y27.7 trillion or 4.6% of JGBs outstanding. The MoF argues that recent individual investor reluctance for JGBs is not an issue because their weighting is so low. However, it goes without saying, as the article accurately points out, that it is an issue, as the government is poised to take on even more debt in the face of declining tax revenues.
There’s a point where yields are so low that you might as well just stay in cash. If anything, the opportunity cost of locking money long-term is worth more than 0.6% yield for these Japanese.