The Bank of Japan has released its Bond Market Survey for August 2026, which provides insights into the current state of the bond market and expectations for future interest rates. The survey, conducted from August 3 to August 7, 2026, collected responses from 77 eligible institutions for the Bank of Japan's outright purchases and sales of Japanese Government Bonds (JGBs) and major insurance companies, asset management companies, etc.
The survey found that the average expected yield for newly issued 10-year JGBs at the end of September 2026 was 2.82%, with a third quartile (75th percentile) of 2.90% and a median of 2.80%. For the end of March 2029, the average expected yield was 3.00%, with a third quartile of 3.20% and a median of 3.00%.
In terms of the probability distribution forecast for the newly issued 10-year JGB yield at the end of March 2029, the survey showed that 27.7% of respondents expected a yield between 3.01% and 3.25%, while 24.9% expected a yield between 2.76% and 3.00%. The arithmetic average of the expected yields was 2.66%.
The survey also asked about the degree of bond market functioning, with 13 respondents (out of 77) stating that it had improved over the past three months, while 86 respondents stated that it had not really improved. The diffusion index, which measures the difference between the percentage of respondents who stated that the market had improved and those who stated that it had decreased, was -16.
The Bank of Japan conducts this survey quarterly, in February, May, August, and November, to gather information on the current state of the bond market and expectations for future interest rates. The results of the survey can provide valuable insights for market participants and policymakers, helping them to better understand the dynamics of the bond market and make informed decisions.