JGB-Treasury Correlation Persists, Anchored by Japanese Institutional Demand

Japanese government bonds have tracked U.S. Treasury declines in five instances over ten months, driven by structural demand: Japanese banks, insurers, and the GPIF hold massive foreign-bond portfolios and price relative value off UST curves before Tokyo opens. This mechanical correlation holds absent a domestic catalyst—a Bank of Japan policy shift, for instance. The June 18 decline confirms the regime remains intact, though forward momentum depends on Treasury term-premium repricing and BOJ bond-buying adjustments.