Japanese Individual Investors Step Up Government Bond Purchases as November Issuance Doubles

Japanese individual investors are buying government bonds at a faster pace. Issuance of bonds for individual investors reached 2.03 trillion yen, or about $12.6 billion, in November, double the previous month’s level; the issuance reflects subscription orders received in late October. About two-thirds of recent purchases were concentrated in five-year fixed-rate bonds, which yield 2.39% annually.

Illustrative image related to investment in Japanese government bonds.（VietVance）

The Bank of Japan said in October that it had won its decades-long battle against deflation. As expectations of rising prices strengthen and government bond rates increase, households are reconsidering keeping their money in low-interest bank accounts. Japanese residents currently hold about $7 trillion in cash, most of it deposited in banks. The offering rates on three-year and five-year bonds for individual investors have also exceeded 2% for the first time.

Monthly purchases of these bonds have been about 1 trillion yen since July 2026. Stephen Spratt, a strategist at Societe Generale, believes that if the current pace of purchases continues over the long term, it will mark a major shift in where households place their money; he estimates that most of the funds flowing into government bonds may come from bank deposits. Japan’s Ministry of Finance has actively promoted these bonds, emphasizing the protection of principal, while banks have shown little enthusiasm for recommending them to customers.

Analysts at Morgan Stanley UFJ estimate that, if government bond yields remain at current levels, Japanese households’ bond holdings could rise from about 20 trillion yen now to 50 trillion yen by 2030. That projection still depends on how yields develop. Bonds for individual investors currently account for less than 2% of Japan’s government bond market.

Source: VietVance