Bond Market Survey (August 2026)
Overview
The Bank of Japan’s Financial Markets Department released the Bond Market Survey conducted from August 3 to 7, 2026, on September 1, 2026. There were 77 survey respondents. For the secondary market functioning of long-term Japanese government bonds, the current-functioning DI moved from -16 previously to -12, while the change compared with three months earlier moved from 12 to 0. The current DIs for bid-ask spreads, order volume, trading frequency, and trading lot size were all negative, while the price and lot-size availability assessment DIs were 16 and 19, respectively. From the end of September 2026 through the end of fiscal 2028, average yields on newly issued government bonds were expected to move from 1.58% to 1.96% for 2-year bonds, from 2.08% to 2.36% for 5-year bonds, from 2.82% to 3.00% for 10-year bonds, from 3.71% to 3.76% for 20-year bonds, and from 3.98% to 4.01% for 30-year bonds. The next release is scheduled for December 1, 2026.
Key points
- There were 77 survey respondents, and the response period was August 3 to August 7, 2026.
- The current bond market functioning DI was -12, and the change compared with three months earlier was 0.
- The current assessment DIs for bid-ask spreads, order volume, trading frequency, and trading lot size were negative.
- The average outlook for the yield on newly issued 10-year bonds moved from 2.82% at the end of September 2026 to 3.00% at the end of fiscal 2028.
Overview
The Bond Market Survey (August 2026 Survey) was conducted by the Bank of Japan’s Financial Markets Department with the secondary market for long-term Japanese government bonds in mind. The respondents were cooperating participants among those eligible for Japanese government bond trading operations, as well as large institutional investors, including life insurance companies, non-life insurance companies, and investment trust management companies.
The survey assesses bond market functioning and liquidity through functioning assessments, bid-ask spreads, order volume, trading frequency, number of counterparties, trading lot size, and the ability to trade at intended prices and lot sizes; it also aggregates outlooks for yields on newly issued government bonds across maturities. The DI is calculated in percentage points by subtracting the percentage of respondents choosing “3” from the percentage choosing “1.”
Details
The current functioning assessment DI moved from -16 previously to -12, while the change DI moved from 12 previously to 0. The current composition was 6% “high,” 75% “not particularly high,” and 18% “low,” with 5, 58, and 14 respondents, respectively.
The current DIs for individual items were -25 for bid-ask spreads, -33 for order volume, -6 for trading frequency, -3 for number of counterparties, and -16 for trading lot size. Price availability was 16, and lot-size availability was 19. The change DIs were -4 for spreads, -5 for order volume, -11 for trading frequency, 2 for number of counterparties, and -5 for trading lot size.
The average yield outlook for newly issued government bonds from the end of September 2026 through the end of fiscal 2028 was 1.58%, 1.68%, 1.77%, 1.85%, 1.92%, and 1.96% for 2-year bonds, and 2.08%, 2.17%, 2.24%, 2.29%, 2.34%, and 2.36% for 5-year bonds. For 10-year bonds, it was 2.82%, 2.90%, 2.95%, 2.98%, 3.01%, and 3.00%.
The average outlook was 3.71%, 3.74%, 3.76%, 3.76%, 3.78%, and 3.76% for 20-year bonds, and 3.98%, 4.01%, 4.02%, 4.02%, 4.03%, and 4.01% for 30-year bonds. The number of respondents for each maturity was 75 for 2-year, 5-year, and 20-year bonds, 76 for 10-year bonds, and 74 for 30-year bonds.
The probability distribution for the yield on newly issued 10-year bonds was, in ascending order, 0.4%, 1.1%, 2.2%, 6.1%, 15.6%, 27.7%, 24.9%, 13.9%, 6.0%, and 2.1% at the end of fiscal 2027, and 0.9%, 1.2%, 3.0%, 6.6%, 14.8%, 25.7%, 22.3%, 15.0%, 7.8%, and 2.6% at the end of fiscal 2028. The published materials also include a chart showing the trend in the bond market functioning assessment DI and notes concerning the survey respondents.