PIMCO defies market margin with conviction on Japanese long‑dated bonds amid recent upheaval

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1. https://www.gurufocus.com/news/8553378/pimco-sticks-with-japans-30year-bonds-after-41-billion-market-rout – Please view link – unable to able to access data
2. https://www.insurancebusinessmag.com/asia/news/breaking-news/pimco-flags-bond-market-shift-in-japan-538312.aspx – In June 2025, Pacific Investment Management Co (PIMCO) highlighted a significant shift in Japan’s bond market, urging global institutional investors to reconsider their duration strategies. The firm observed that 30-year Japanese government bond (JGB) yields rose above 3% in May 2025, levels last seen more than two decades ago. This repricing followed key monetary policy changes by the Bank of Japan (BOJ), which ended its negative interest rate policy and yield curve control framework in March 2024. Since then, the BOJ has raised interest rates twice and started reducing its balance sheet, introducing increased volatility in the fixed income market. The bond market transformation is reflected in the changing behaviour of Japan’s major life insurers, who have traditionally been large buyers of long-term JGBs. Rising yields have altered their investment postures, with some now acting as net sellers after addressing their asset-liability duration gaps. Meiji Yasuda Life Insurance disclosed unrealised losses totalling approximately ¥1.386 trillion (US$9.7 billion) on its JGB portfolio for the fiscal year ending March 2025, a sharp increase from ¥161.4 billion the prior year. Nippon Life Insurance reported about ¥3.6 trillion (US$25 billion) in unrealised losses, in addition to realising ¥500 billion in losses through bond disposals. These losses are primarily linked to long-duration JGBs, whose market values have declined due to the rise in domestic interest rates. According to PIMCO, technical dynamics in the JGB market are playing a major role in recent price fluctuations.
3. https://www.japantimes.co.jp/business/2025/03/18/companies/pimco-japan-bond-trade/ – In March 2025, Pacific Investment Management Co. (PIMCO) funds that held an underweight position on Japanese government bonds (JGBs) changed their stance as yields reached multi-year highs. PIMCO turned ‘overall neutral’ on JGBs, according to Sachin Gupta, a portfolio manager at the company. He now sees value in 30-year bonds, whose yields have climbed to the highest since 2006 as traders expect the Bank of Japan to keep hiking interest rates this year while peers from the U.S. to Australia ease monetary policy. Gupta stated that rates have gone up in line with their expectations from a while ago, making it sensible to take profits and reassess. This shift in PIMCO’s strategy reflects the changing dynamics in Japan’s bond market, influenced by the BOJ’s monetary policy adjustments and the broader economic environment.
4. https://www.pimco.com/us/en/insights/apac-market-outlook-2026-diverging-policies-enduring-opportunities – In its 2026 Asia-Pacific market outlook, PIMCO highlighted that current yield levels in Japan are starting to present attractive investment opportunities after a prolonged period of low yields. The firm noted that portfolios could now provide the potential for total income return of above 3% in yen terms by selecting maturities, sectors, and securities, while maintaining duration risk and credit quality comparable to broad Japanese bond benchmarks. Higher yields also offer potential for capital gains if interest rates fall and can serve as a hedge against economic shocks, stock market volatility, or a sharp yen appreciation. For global investors, currency-hedging costs currently work in their favour, enhancing the relative appeal of Japanese bonds and offering additional yield compared with global peers. PIMCO maintains a preference for the long end of the curve, such as 30-year JGBs, citing the steepness of the yield curve and incentives for the Ministry of Finance to limit long-end issuance as supporting factors.
5. https://www.oanda.com/us-en/trade-tap-blog/analysis/fundamental/record-spike-japan-jgb-yield-causes-market-impact/ – In July 2025, OANDA analysed the record spike in Japan’s 30-year Japanese Government Bond (JGB) yield, which reached 3.43%, amid the Bank of Japan’s policy shift. The analysis highlighted that Japanese life insurers had trimmed their JGB holdings by 1.35 trillion yen in the three months through March 2025, the third-largest reduction on record and the steepest reduction since 2017. This reduction was attributed to the rise in domestic interest rates, which led to a decline in the market values of long-duration JGBs. The analysis also noted that the acute spike in the 30-year JGB yield observed during May and June was accompanied by synchronized upward movements in other longer-term sovereign bond yields, albeit at a slower pace. The 30-year US Treasury bond yield rose by 81 basis points to print an intraday high of 5.15% in May, and the 30-year German bond yield rallied by 36 basis points to print an intraday high of 3.20% over the same period. This trend underscores the global impact of Japan’s bond market dynamics and the interconnectedness of sovereign bond yields.
6. https://www.pimco.com/us/en/insights/global-fixed-income-markets-new-year-2026-us/detail – In its 2026 outlook, RBC Global Asset Management discussed the steepening of the Japanese yield curve, noting that long-term yields have risen more than short-term ones. The report highlighted that 30-year yields on Japanese government bonds are around 3.30%, a level that the Bank of Japan is unlikely to reach with policy rates. The extreme relative steepness of the Japanese bond curve suggests that investors are well compensated for future risks in Japan. The report also forecasted that the Bank of Japan will gradually raise its policy rate over the coming year, that inflation will ease, and that Japanese bonds will likely outperform other regions. This analysis provides context to PIMCO’s preference for the long end of the curve, such as 30-year JGBs, as mentioned in their 2026 Asia-Pacific market outlook.