Net supply of Japanese government bonds is set to surge +8% to ¥65 trillion ($415 billion) in the fiscal year starting April, the largest increase in at least 15 YEARS.

This comes as the Bank of Japan continues stepping back from the market.

BoJ holdings are expected to shrink by ¥46.5 trillion next fiscal year, compared with ¥41.1 trillion in the current period, as monthly purchases are cut by more than a quarter.

This leaves private buyers with way more issuance to absorb.

Meanwhile, 10-year JGB yields have surged to 2.13%, the highest since 1999.

Japanese government bonds already lost -6% last year, the worst performance among 40+ sovereign markets tracked by Bloomberg.

More supply + fewer BoJ purchases = higher borrowing costs for the world's most indebted developed nation.

Brace for more volatility in the Japanese bond market.