The Bank of Japan's briefing reveals market divergences, raising concerns over the liquidity crisis in ultra-long-term government bonds.

On May 20, Jin10 reported that the Bank of Japan released briefing materials used in a meeting with bond market participants, stating that some individuals indicated an improving trend in the functionality of the Japanese government bond market due to the Bank of Japan's reduction in bond purchases. Some attendees expressed that the liquidity of the ultra-long-term Japanese government bond market is increasingly depleted, resulting in distortions between the ultra-long-term yields and yields of other maturities. Some market participants called for a faster reduction in bond purchases starting from fiscal year 2026, while others advocated for maintaining or slowing down the pace of reduction. There are differences among market participants regarding the duration of the planned maintenance, with some hoping that the new bond purchase reduction plan will cover about two years, while others argue for first establishing a one-year plan and then maintaining the reduction rate thereafter.