The era of endless liquidity in Japan is quietly ending.

The Bank of Japan (BoJ) — long known as the ultimate buyer of last resort — is pulling back aggressively from the bond market, and the impact is starting to show.

🏦 What’s Happening?

📉 BoJ JGB Ownership Falls to ~48%

  • Lowest level in 8 years

  • Down 7 percentage points from the 2022 peak

  • Marks a clear exit from the Yield Curve Control (YCC) era

This isn’t accidental. It’s deliberate quantitative tightening (QT).

⏳ Tapering on Autopilot

The BoJ is cutting bond purchases fast:

  • 🟡 Mid-2024: ¥5.7T/month

  • 🔻 Now: ¥2.9T/month

  • ⏭️ Target (early 2027): ¥2.1T/month

Liquidity support is being removed — and the schedule is locked in.

🌍 Foreign Investors Are Leaving Too

  • Foreign ownership of JGBs: ~12%

  • Near the lowest level since 2019

  • Global capital is chasing higher yields elsewhere and avoiding FX risk

👉 Result: Both major buyers are stepping away at the same time

⚠️ Why This Matters

📌 Government debt issuance continues
📌 Demand is shrinking
📌 Supply-demand imbalance is growing

➡️ Yield pressure is now structurally skewed higher

This is a major shift for global markets that relied on Japan’s liquidity spillover for years.

🧠 Big Picture

Japan is no longer the global liquidity backstop it once was.
As QT accelerates and buyers disappear, volatility risk rises — not just for bonds, but for global assets.

Macro is waking up. Stay alert.

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