Outlook for Japanese Demand for US Fixed Income in 2024

Apollo Chief Economist

The Bank of Japan now owns almost 60% of Japanese government bonds outstanding, see chart below. This statistic is truly remarkable. As this number approaches 100%, there is no economic theory for what will happen.

As the only G7 central bank, the BoJ has not raised short-term interest rates in response to rising inflation. With the Fed now talking about rate cuts in 2024, the BoJ may end up never raising short-term interest rates during this cycle.

With Japanese interest rates staying low and US rates coming down, the implication for markets is that Japan may return as a US fixed income buyer in 2024.

This presentation discusses this topic and the outlook for Japanese demand for US fixed income.

The BoJ owns almost 60% of Japanese government bonds outstanding
Source: BoJ, Bloomberg, Apollo Chief Economist
Outlook for Japanese demand for US fixed income in 2024

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