Under the boost of risk aversion sentiment, ultra-long-term Japanese government bonds are favored, with foreign capital's buying volume surging in March.

Last month, Japanese ultra-long-term government bonds attracted a record amount of foreign capital inflow, as the US tariff policy sparked risk aversion sentiment, enhancing the attractiveness of Japanese ultra-long-term government bonds as safe-haven assets. According to the latest data released by the Japan Securities Dealers Association on Monday, global funds net bought 2.18 trillion yen (about $155 billion) of initial-term Japanese government bonds with maturities exceeding 10 years in March; the net purchase of Japanese government bonds of all maturities amounted to 6.03 trillion yen, the second highest level since 2004. Demand for Japanese government bonds has been rising since March due to market volatility caused by the Trump administration's tariff policy. Additionally, preliminary weekly data provided by the Japanese Ministry of Finance shows that foreign capital inflows into Japanese government bonds this month remain significant. In the past, US bonds have often been a safe haven for funds during risk events. However, amidst the current global market turbulence, US bonds are facing large-scale selling and are seen as a source of risk. The direct reason may be the deleveraging of US bonds due to their liquidity and basis trading, but the more fundamental reasons are the significant decline in US credit caused by the US government's excessive tariff behavior and concerns about rising US inflation, causing investors to sell US bonds. Therefore, funds are turning to other safe-haven assets such as Japanese government bonds, the yen, and gold. In contrast, Japanese domestic insurance companies sold a record 645.8 billion yen of ultra-long-term Japanese government bonds in March. Data shows that the Japanese 30-year government bond rose to its highest level since 2006 in mid-March and further climbed this month, as the Bank of Japan slowed its purchases of ultra-long-term government bonds and increased volatility in the US government bond market disrupted the global bond market. However, Shoki Omori, Chief Strategist at Nomura Securities, stated, "The scarcity of buyers and the rise in US long-term government bond yields may hinder active investment in Japanese ultra-long-term government bonds. March coincides with the end of the Japanese fiscal year, during which investors typically adjust their balance sheets." Japanese domestic insurance companies have differing attitudes towards ultra-long-term Japanese government bonds. Taiju Life Insurance stated last week that although the yields of 30-year and 40-year Japanese government bonds are attractive, the market has not stabilized yet. Daido Life Insurance plans to increase its holdings of Japanese government bonds in the upcoming fiscal year beginning in April, similar to the previous fiscal year. Fukoku Mutual Life Insurance plans to invest in Japanese ultra-long-term government bonds this fiscal year and is considering shifting its bond investment from large foreign bonds such as US bonds to Japanese bonds.