Institution: Japanese government bonds still show a mild bearish outlook due to fiscal concerns.

Justin Heng of HSBC Global Investment Research commented that due to fiscal concerns, Japanese government bonds still appear mildly bearish. The Asia-Pacific interest rate strategist said, "Operational, safety, and insurance constraints could keep oil prices elevated, as even a credible [US-Iran] ceasefire agreement would not lead to a swift recovery in energy supply." He added, "This poses risks to Japan's fiscal outlook, as the government has repeatedly promised subsidies to alleviate cost of living pressures." The high expenditure on these subsidies means the possibility of additional budgetary measures cannot be ruled out. Heng stated, "Discussions on additional budgets could potentially begin as early as mid-May." The strategist also noted that this could lead to another sell-off of ultra-long Japanese government bonds, similar to the one seen in November 2025.