Japanese long-term government bonds attracted a record influx of foreign funds in the second quarter.

Despite concerns about fiscal sustainability putting pressure on the world's second largest government bond market, the rise in Japanese yields has attracted record inflows of foreign funds into ultra-long-term Japanese bonds for two consecutive quarters. According to data released by the Japan Securities Dealers Association on Tuesday, global investors bought a net 5.02 trillion yen of Japanese government bonds with maturities of 10 years or longer in the second quarter ending on June 30. This amount exceeded the previous record of 3.79 trillion yen set in the first quarter. The surge in overseas demand has provided crucial support for Japanese long-term bonds, which are facing pressure due to expectations of increased government spending in Japan. Although there were reports at the end of May that the Ministry of Finance would reduce the issuance of long-term bonds, causing a temporary spike, the gains mostly faded in June after the plan was implemented.