One likely explanation is that JGBs continue to command market confidence, despite Japan’s grave fiscal situation. Fiscal consolidation is not a task that can be achieved over a short period of time. It is therefore important for Japan to steadily work on measures aimed at fiscal consolidation while market confidence regarding the creditworthiness of JGBs remains in place.
B.  Japan’s economy  Following a V-shaped recovery after the Lehman shock, Japan’s economy had been on a moderate recovery trend, but the situation changed completely with the earthquake on March 11. The economy is currently facing strong downward pressure, mainly on the production side.