Japan Tries to Steady Bond Market with GPIF Push

Japan's government is trying to calm down the bond selloff caused by concerns over expansionary fiscal policy and potential interference in monetary policy. Finance Minister Satsuki Katayama said the government wants to explore ways to encourage pension funds, including GPIF, to increase their holdings of Japanese financial assets.

GPIF, one of the largest pension pools in the world, held 293.4 trillion yen (approximately $1.81 trillion) in assets at the end of December, with a roughly equal split across domestic and foreign equities and bonds. A shift toward domestic assets by GPIF would be closely watched by global markets.

The bond selloff has pushed Japanese government bond yields to multi-decade highs due to concerns over Prime Minister Sanae Takaichi's expansionary fiscal agenda and fears of political interference in monetary policy. Economy Minister Minoru Kiuchi addressed these concerns, saying the government would never convey its preference for BOJ rate decisions in advance.

The government is revising its economic blueprint, which sparked independence concerns by stating that it was very important for monetary policy to be guided appropriately to achieve a stronger economy without mentioning the central bank's legal independence. A final version of the blueprint is expected as early as next week pending cabinet approval.