The moves in Japanese debt come just a little over a week after the Bank of Japan surprised markets by adopting negative interest rates. The rising trend for negative yields in developed world government debt has augmented demand for safe-haven assets as investors reassess exposure to riskier assets.
“Markets are pricing that the BOJ will cut interest rates to negative 0.3 percent by the end of the year,” Takuji Okubo, managing director and chief economist at Japan Macro Advisors, told CNBC.
ETF investors can also gain exposure to Japanese government bonds through more diversified international Treasury bond options. For instance, Japanese government bonds make up 23.5% of the SPDR Barclays International Treasury Bond ETF (NYSEArca: BWX) and 22.8% of the iShares International Treasury Bond ETF (NYSEArca: IGOV). Year-to-date, BWX is up 3.3% and IGOV is 4.3% higher.
DB 3x Japanese Govt Bond Futures ETN
Max Chen contributed to this article.