---
title: "How to save Japanese bonds? The Japanese Finance Minister's \"rhetoric\" is useless; only the central bank can \"print money.\""
description: "The Japanese government bond market has experienced a historic collapse due to structural imbalances, with Goldman Sachs bluntly stating that verbal interventions have failed. The Bank of Japan is bei"
type: "news"
locale: "en"
url: "https://longbridge.com/en/news/273158818.md"
published_at: "2026-01-21T02:03:17.000Z"
---

# How to save Japanese bonds? The Japanese Finance Minister's "rhetoric" is useless; only the central bank can "print money."

> The Japanese government bond market has experienced a historic collapse due to structural imbalances, with Goldman Sachs bluntly stating that verbal interventions have failed. The Bank of Japan is being forced towards the only "logical conclusion"—restarting unlimited bond purchases. However, this "money printing to save the market" may lower yields but is highly likely to cause the yen exchange rate to breach the 160 barrier, leaving the central bank in a dilemma between "protecting bonds" and "protecting the currency."

The Japanese government bond market is experiencing a "collapse" that is sending shockwaves through global investors. With long-term government bond yields soaring to historic highs, confidence in Japan's fiscal discipline has sharply eroded. Goldman Sachs bluntly stated that, faced with a severe supply-demand imbalance, **Japanese policymakers have few options left; despite the finance minister's attempts to verbally reassure, the "logical endgame" points to the Bank of Japan being forced to intervene again.**

The severity of this crisis has been confirmed by U.S. Treasury Secretary Janet Yellen. In Davos, she described the volatility in Japanese bonds as an astonishing "six standard deviations," which has already created "spillover effects" impacting the U.S. bond market. Although Japan's finance minister, Shunichi Suzuki, immediately called for the market to "stay calm," causing a brief retreat in the 40-year yield, analysts generally believe that mere verbal intervention cannot reverse this trend driven by structural imbalances and political uncertainty.

As panic spreads, analysts warn that if the decline deepens, the Bank of Japan may have no choice but to **resort to its unlimited bond-buying tool for intervention. However, this "printing money to save the market" move is a double-edged sword—it can lower yields but is likely to severely impact the yen's exchange rate, pushing it below the critical psychological barrier of 160.**

****

## Goldman Sachs' Judgment: This is Not Emotional Overreaction, but "Structural Breakdown"

After a lukewarm response to the 20-year bond auction, Japanese government bonds faced a sell-off described by traders as "everyone, at all maturities, selling at once." The yields on 30-year and 40-year bonds jumped more than 25 basis points in a single day, with long-term rates briefly exceeding 4%.

On the surface, the market has pointed fingers at Prime Minister Fumio Kishida's campaign promise to lower the food consumption tax without a clear source of funding. However, according to Rich Privorotsky, head of Goldman Sachs' Delta-One trading desk, **this is not merely a simple external shock or a short-term emotional outburst, but a concentrated exposure of the structural issue of "lack of natural demand" in the Japanese government bond market over many years.**

Goldman Sachs believes that the Japanese government bond market is in an extremely fragile state of supply-demand imbalance, a trend that is difficult to reverse and has been obscured until now, rapidly magnified under the stimulus of fiscal policy headlines.

The core of this market turmoil is not geopolitical but a limit test of Japan's fiscal capacity.

## Goldman Sachs: Japan Faces a Dilemma, Central Bank Intervention May Be the Endgame

Faced with the pressure of the yield curve's back end breaking 4%, Rich Privorotsky pointed out in a report that Japan is facing two difficult choices:

1.  **Significant Spending Cuts:** This is politically almost "toxic." Especially for Fumio Kishida, who hopes to gain a majority in the upcoming elections, she is trying to unify the campaign platform through tax cuts (such as suspending the food consumption tax) As Privorotsky rhetorically asked: "Who would be willing to pay taxes on food?"
    
2.  **The Bank of Japan is forced to return to YCC (Yield Curve Control):** This is a high-risk option, especially for the yen exchange rate, but it feels like the "logical endgame."
    

Privorotsky pointed out that if Japan approaches the theoretical limit of its fiscal capacity, one side must make a concession. The former (cutting spending) seems hard to swallow, so the latter (central bank intervention) becomes the most likely path.

Gareth Berry, a strategist at Macquarie Bank in Singapore, stated: **"If the sell-off continues, especially if it spreads globally, we should see the Bank of Japan re-enable its unlimited bond purchase tool."**

## The Cost of Exchange Rates: The 160 Defense Line is on the Brink

However, this intervention does not come without a cost.

Ryutaro Kimura, a senior fixed income strategist at AXA Investment Managers Ltd., warned: “If the Bank of Japan takes aggressive intervention measures to suppress interest rates, the USD/JPY exchange rate could at least break through the government's 160 defense line.”

Currently, the yen exchange rate hovers around 158, with growing market concerns about currency depreciation triggered by central bank intervention.

Goldman Sachs summarized that during fiscally dominated periods, governments often rely on inflation while central banks limit nominal interest rates, resulting in persistently low real rates and structurally weak currencies. This seems to be the script Japan is currently heading towards.

## **Why "Verbal Intervention" Can't Save Japanese Bonds: Market Pricing for the "Truss Moment"**

This also explains why Japanese Finance Minister Shunichi Suzuki's "calm rhetoric" can only temporarily alleviate volatility but cannot reverse the trend. The Ministry of Finance can emphasize the scale of deficits, debt structure, and medium- to long-term plans, but it cannot change one reality: **the market is no longer willing to unconditionally buy long-term Japanese bonds.**

Data shows that Japanese life insurance companies were net sellers of Japanese government bonds in December, further exacerbating market concerns about the lack of "natural demand." Colin Finlayson, an investment manager at Aegon Asset Management, stated: **"Long-term bonds have almost no natural demand, and it's hard to see anything supporting Japanese government bonds in the short term."**

The judgments of several institutions echo Goldman Sachs:

-   Ultra-long-term Japanese bonds "lack natural demand";
    
-   Without official intervention, selling pressure is unlikely to spontaneously dissipate;
    
-   A certain form of policy "circuit breaker" may be inevitable.
    

**As the February 8th election approaches, market panic is further escalating. Investors are concerned that high-profile early-stage aggressive fiscal stimulus plans may trigger a "Truss moment" similar to that of the UK in 2022.**

UBS traders pointed out that if the Bank of Japan is forced to follow fiscal policy for expansion, it will find itself in a dilemma between bond yields and currency exchange rates. This is no longer just a fluctuation in a single market, but a repricing of policy credibility.

"Essentially, the market is pricing in Japan's Truss moment," said Masahiko Loo, a senior fixed income strategist at State Street Investment Management

### Related Stocks

- [1578.JP - Sumitomo Mitsui Trust Holdings, Inc.](https://longbridge.com/en/quote/1578.JP.md)
- [1320.JP - Daiwa Securities Group, Inc.](https://longbridge.com/en/quote/1320.JP.md)
- [1397.JP - MS&AD Insurance Group Holdings, Inc.](https://longbridge.com/en/quote/1397.JP.md)
- [FXY.US - Currencyshares JPY Trust](https://longbridge.com/en/quote/FXY.US.md)

## Related News & Research

| Title | Description | URL |
|-------|-------------|-----|
| 这家华尔街投行警告：日元套利交易是 “定时炸弹” | 日元套利交易是通过借入低息日元购买高收益资产赚取利差，但在高风险资产暴跌或日元升值时会迅速瓦解。BCA Research 警告，套利交易规模近年激增，可能重演 2008 年、2015 年和 2020 年崩盘场景。日元今年已升值逾 1%，市场 | [Link](https://longbridge.com/en/news/275525998.md) |
| 日股狂欢难掩债汇风波，“高市交易” 究竟是机会还是陷阱？ | 日本股市在 “高市交易” 推动下创历史新高（日经 225 本周涨 5%），但债市与汇市平静背后暗藏 “高市陷阱”：若高市早苗大幅支出以兑现承诺，可能削弱日元、加剧通胀，最终反噬股市。尽管她承诺减税不涉及新债，但分析师质疑兑现能力。 | [Link](https://longbridge.com/en/news/276004435.md) |
| 日本市场近期发生了什么？ | 高盛认为，日本市场定价逻辑发生根本转变：自民党胜选后，市场开始定价日本退出超低实际利率体制，表现为日元走强、收益率曲线趋平。核心驱动力是投资者预期资产回流。但若日本央行政策不够鹰派，日元走弱等旧有逻辑可能回归，未来几周面临不确定性。 | [Link](https://longbridge.com/en/news/275980094.md) |
| 美国 3 年期国债拍卖的高收益率低于上个月，且需求有所下降 | 美国 3 年期国债拍卖最高收益率较上月下降，需求减弱 | [Link](https://longbridge.com/en/news/275498317.md) |
| 如何理解开年全球市场？“可负担性” 才是 2026 的总叙事：“主街” 要赢一次，AI 叙事巨变，日元是 “关键” | 美银 Michael Hartnett 团队认为，特朗普” 可负担性” 政治推动资金从” 华尔街精英阶层” 转向” 主街普通民众”：小盘价值股崛起，科技巨头承压；AI 叙事从” 惊叹” 转向” 致贫”，相关债务激增；日元与日股相关性转正预示 | [Link](https://longbridge.com/en/news/275966935.md) |

---

> **Disclaimer**: This article is for reference only and does not constitute any investment advice.