Japanese Bonds Tracking U.S. Treasuries—For Now

Japanese government bonds have moved in sync with U.S. Treasuries in five instances over ten months. The driver: Japanese banks, insurers, and the GPIF—Japan's massive pension fund—hold large foreign bond portfolios and price them relative to U.S. yields before Tokyo markets open. This correlation persists without domestic catalysts. A Bank of Japan policy shift would break the pattern. The June 18 move suggests the regime holds, though future momentum turns on U.S. Treasury repricing.