The Bank of Japan released its February 2026 Bond Market Survey, reporting market participants’ views on secondary Japanese government bond (JGB) market functioning and liquidity and their outlook for newly issued JGB yields. The diffusion index for current market functioning remained negative at -26, and the index for change from three months earlier was -13. Liquidity measures also stayed weak on balance, with respondents still reporting wide bid-ask spreads (DI -31) and small order quantities (DI -38), while dealing frequency improved to near neutral (DI -1). Only 25% said they could deal at expected prices and 32% at expected dealing lots, with most answering “not really” in both cases. Yield expectations pointed to a gradual rise across maturities, with the average forecast for the newly issued 10-year JGB at 2.29% at end-March 2026, 2.46% at end-December 2026 and 2.55% at end-March 2028, and the 30-year at 3.63% at end-March 2026 and 3.69% at end-March 2028; for end-March 2027 the largest share of probability mass for the 10-year was in the 2.26–2.50% range (31.8%). The survey was conducted from 2 to 6 February 2026 and the next release is scheduled for late May 2026.
Bank of Japan 2026-03-02
Bank of Japan publishes February 2026 Bond Market Survey showing market functioning DI at -26 and higher JGB yield expectations
The Bank of Japan's February 2026 Bond Market Survey indicates continued weak liquidity in the secondary Japanese government bond market, with negative diffusion indices for market functioning and liquidity measures. Yield expectations suggest a gradual rise, with the newly issued 10-year JGB forecasted at 2.29% by end-March 2026 and 2.55% by end-March 2028.