UBS Asset Management recommends that Japan stop issuing long-term government bonds to stem the sell-off frenzy.

A seasoned portfolio manager has proposed to Japan to stop issuing government bonds with a maturity of more than 30 years in order to stabilize the country's bond market. The yield on 40-year Japanese government bonds soared to 3.675% last month, reaching the highest level since the introduction of bonds with this term in 2007. Kevin Zhao, the global head of sovereign and currency management at UBS Asset Management, said this is the latest reason why the Japanese Ministry of Finance should stop issuing long-term government bonds, as the demand for long-term bonds is decreasing due to the changing population structure in Japan's aging society. He stated that the baby boomer generation in Japan has about 20 years of life expectancy left, so Japanese life insurance companies and pension funds no longer need to reserve bonds with a term of 30 years or longer as they did in the past. "It is time for the Ministry of Finance to recognize the structural shift in demand for long-term government bonds," said Zhao, who has 32 years of experience in the bond market. "The Ministry of Finance should announce the cessation of issuing any bonds with a term over 30 years, as there is no longer any demand for them."