Institutional demand for Japanese government bonds surging: Japanese insurers bought +$3.9 billion of 10+ year Japanese government bonds (JGBs) in June, the largest monthly purchase in 3 years. This marks a sharp reversal from -$1.2 billion sold in the prior month. This is also the 2nd consecutive monthly purchase over the last 11 months. Insurers are one of the biggest domestic buyers of long-term JGBs, and their return could provide an important source of support for the market. The shift comes as authorities move to strengthen domestic demand, including a proposal to allow government bonds in a tax-free investment program for individuals, and encourage large pension funds to increase allocations to Japanese assets. Japan’s bond market may finally be finding a material source of demand.