Individual Government Bond [October 2026] Interest Rate Forecast | Calculation formulas to predict ahead of the October 7th announcement and 3 pitfalls where you lose money by …

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“Let’s wait and see the announcement on October 7th”—if that is what you are thinking, please read on a little further.

The interest rate for individual government bonds is not decided by someone’s whim. It is derived simply by plugging publicly available numbers into a fixed formula. In other words, you can know the answer almost exactly the day before the announcement.

Moreover, this month is the first offering since the Bank of Japan raised its policy interest rate to 1.25%. Long-term interest rates have exceeded 3%, and the 10-year floating rate is at a turning point of whether it will hit the 2% range for the first time since issuance began.

In this article, I will estimate the interest rate for the October offering based on market data as of October 2nd, and organize—with calculation formulas—the interest you are missing out on without realizing it by choosing between “floating or fixed” and “buying this month or waiting.” By the time you finish reading, you should be ready to act the moment you see the numbers on October 7th.

*This article is based on information as of October 3, 2026. It will be updated to the final values after the interest rate announcement on October 7th.

Conclusion first (estimates based on market data up to October 2nd)

• 10-year Floating (199th issue): around 2.03% per annum (range 2.00–2.07%)

• 5-year Fixed (187th issue): around 2.37% per annum (range 2.32–2.42%)

• 3-year Fixed (197th issue): around 2.10% per annum (range 2.05–2.15%)

• Condition for 10-year floating to hit the 2% range: Reference rate (compound yield) determined by the October 6th auction must be 3.03% or higher

*These are estimates by the author and not final values. Since the calculation process for the reference rates of 5-year and 3-year fixed bonds is not disclosed, the margin of error is larger than for the 10-year floating bond. The final interest rates will be announced by the Ministry of Finance on Wednesday, October 7th.

Individual Government Bond October 2026 Offering Interest Rate Forecast | Comparison with September

First, here is the big picture. I will list the September offering (final) and the October offering (estimate) side by side.

*Net proceeds are calculated at a tax rate of 20.315%. For the 10-year floating bond, it is assumed that the initial interest rate continues for one year.

All three types are at levels likely to exceed September. So, why can I say this much before the announcement? Once you understand the reason, you will be able to predict it yourself from next month onwards.

Why it keeps rising | 2026 interest rate trends and points to watch until October 6th

Here is the initial interest rate for the 10-year floating rate bond, listed by subscription month.

The 1.95% rate for the September subscription is the highest level among 198 offerings since issuance began in March 2003. It has risen by more than 0.5% since the beginning of the year. What you should know here is the fact that even for those who bought the 10-year floating rate bond in January, the interest rate was automatically revised from 1.39% to 1.80% in August. In other words, as far as the 10-year floating rate bond is concerned, the period spent waiting to see if rates would rise simply meant missing out on receiving government bond interest.

There are two main reasons for this. The Bank of Japan raised its policy interest rate from 1.0% to 1.25% on September 18, and U.S. long-term interest rates are at a high level in the 5% range. The October subscription will be the first month where conditions are set after the rate hike decision.

However, these estimates are based on data as of October 2. If overseas interest rates or exchange rates move significantly on October 5 or 6, the auction results will also change. That is precisely why there is value in “having” the formula rather than “waiting” for the numbers.

Reasons you can predict interest rates before the October 7 announcement | 3 calculation formulas

10-year floating rate = Base rate × 0.66 (Base rate is the “compound yield” of the auction results)

The base rate for the 10-year floating rate bond is the compound yield calculated from the “average successful bid price” of the 10-year fixed-rate government bond auction held just before. For the October subscription, the auction on Tuesday, October 6 will be used.

There is one point that is easily overlooked here. The “average successful bid yield” reported in the news and this base rate are not the same number.

In the September 1 auction, the average successful bid yield was 2.995%, while the base rate was 2.96%. If you multiply 2.995 by 0.66, you get 1.98%. This is 0.03% off from the actual 1.95%. This is almost always the reason why predictions based on reported figures turn out to be wrong.

The correct figure is listed at the bottom of the Ministry of Finance’s auction results page as “(Reference) Compound yield that becomes the base rate for individual government bonds (10-year floating rate)”. For September, it was 2.96% × 0.66 = 1.9536%, rounded to 1.95%. It matches the announced value exactly.

So, what about October? The long-term interest rate on October 2 was 3.09%. 10-year government bonds usually switch to a new issue every three months, and October is one of those months (the issue number and coupon rate will be announced by the Ministry of Finance at 10:30 AM on the day of the auction). Since the price of a new issue will be close to par value, if the interest rate level does not change, I expect the base rate to be roughly 3.06–3.09%. Multiplying by 0.66 gives 2.02–2.04%, with the center being around 2.03%.

There is only about a 0.05% margin until the 3.03% tipping point. If interest rates fall even slightly by October 6, there is still a possibility that it will fall below 2%. If you save this quick reference table, you will know the next day’s announced value the moment you see the auction results.

5-year fixed rate = 5-year expected yield – 0.05%

The 5-year fixed rate is based on the expected yield for a 5-year period, calculated from market conditions two business days before the start of the subscription (in this case, October 6, the same as the auction). In September, the base rate was 2.29% – 0.05% = 2.24%.

This base rate is at a level close to the 5-year value in the “Government Bond Interest Rate Information” published by the Ministry of Finance (for September, it was 2.29% against 2.28%). The 5-year rate as of October 1 was 2.41%. From this, we can estimate it to be around 2.37%.

3-year fixed rate = 3-year expected yield – 0.03%

For the 3-year fixed rate, subtract 0.03% from the expected yield for a 3-year period. The “Government Bond Interest Rate Information” as of October 1 shows 1.94% for 2 years and 2.41% for 5 years. Since 3 years falls between those, around 2.10% is the benchmark. Following September, there is a possibility that the 3-year fixed rate will exceed the initial interest rate of the 10-year floating rate bond.

3 steps to prediction that anyone can do

1. Around 12:35 PM on October 6th, open the 10-year interest-bearing government bond page on the Ministry of Finance website and check the ‘Compound yield as the base interest rate’ at the bottom.

2. Multiply that number by 0.66 and round to the second decimal place (= initial interest rate for the 10-year floating rate bond).

3. For the 5-year and 3-year fixed rate bonds, get an estimate by subtracting 0.05% and 0.03% respectively from the 5-year and 3-year values in the ‘Government Bond Interest Rate Information’ for the same day.

For the 10-year floating rate bond, this method matches the announced value. For fixed-rate types, the calculation process for the base interest rate is not published, so the numbers will fluctuate slightly. Please use this only as a guide. Even so, you will get the decision-making material almost a day earlier than those waiting for the announcement.

Check in 30 seconds before buying | Pros and cons of individual government bonds

It is easy to focus on the predicted numbers, but you should also understand the underlying mechanism. If you skip this, you might end up on the losing side in the ‘pitfalls’ section later.

• Pros: The government pays the principal and interest / Can be bought from 10,000 yen / No principal loss even if redeemed early / Guaranteed minimum interest rate of 0.05% per year.

• Cons: Cannot be redeemed for 1 year after issuance / Interest equivalent to the last 2 payments is deducted upon redemption / Not eligible for NISA / No large capital gains like stocks.

In other words, this is a product for placing ‘money you don’t want to lose’ on the ‘premise that you won’t use it for a while.’ The amount you should buy is naturally determined by how much money you have that fits this premise.

Schedule for the October 2026 offering

What you need to be careful about is the deadline. Depending on the financial institution, online applications may close before the 30th. On the other hand, the interest rate is the same regardless of when you apply during the offering period. There is no need to rush on the first day, but if you put it off until the final week, you risk missing the application itself.

Another thing that is surprisingly little known is the difference depending on where you buy. The interest rate is the same no matter which financial institution you buy from, but whether the funds are locked at the time of application, whether it can be completed online, and whether there are benefits such as cash back for large amounts differ by financial institution. It is a waste to have disadvantageous conditions for buying the same product, so be sure to check before applying.

[What I’m wondering about now] Should I choose the 10-year floating or 5-year fixed? Should I wait?

‘Floating or fixed’ is decided by this one number

Suppose the 5-year fixed rate is 2.37% and the 10-year floating rate is 2.03%. For the 10-year floating rate to catch up to the 5-year fixed rate, the base interest rate must rise to approximately 3.6% and remain there.

• If you think the 10-year government bond yield over the next 5 years will average over 3.6% → 10-year floating

• If you think it won’t rise that much, or you are unsure → 5-year fixed

The current level is just under 3.1%. The deciding factor is whether you believe the remaining rise of about 0.5% will “continue.” If you choose based solely on the feeling that “interest rates seem likely to rise, so I’ll go with floating,” it is possible that even if rates do rise, you could still end up worse off than with the 5-year fixed.

*If you redeem the 10-year floating bond after 5 years, the interest equivalent for the last two periods will be deducted, so the actual hurdle is slightly higher.

If you cannot decide, a realistic answer is to split your investment in half. No matter which way it goes, you will only have half the regret.

The break-even point for ‘waiting for rates to rise further’

While you are waiting, that capital does not earn interest from government bonds. The increase required to recover the cost of waiting for one month is, by simple calculation, as follows:

*Interest on savings while waiting is not considered. The higher the deposit interest rate, the smaller the required increase.

From August to September, the 5-year fixed rate rose by 0.18%, so in the end, “those who waited won.” However, that is only known after the fact. In months where interest rates leveled off or turned downward, the amount received decreases by the amount of time waited.

Also, a point often overlooked is that there is little point in waiting for the 10-year floating rate. Even after purchase, the interest rate is adjusted every six months according to the bidding results at that time. The difference in the month of purchase only reliably affects the first six months.

Rather than trying to time the market, split your purchase month into two or three installments. This is the way to minimize the pain if you guess wrong.

By type: Who it is suitable for and the amount received until maturity

For 5 million yen, that is approximately 810,000 yen, 470,000 yen, and 250,000 yen respectively. Even with the same amount, the amount received changes significantly depending on where you place it. If you have funds sitting in a regular savings account, please compare them with this table once.

[Hidden losses] 3 pitfalls where choosing wrong leads to missing out on interest

Pitfall 1: Not knowing what you are giving up with ‘x 0.66’

For the 10-year floating rate bond, you do not receive approximately 34% of the base interest rate. This is like an insurance premium for the benefits of ‘no loss of principal’ and ‘being able to keep up with rising interest rates’.

Conversely, if you have funds that you will definitely not use for 10 years and can decide not to sell them midway, the 10-year fixed-rate government bonds bought on the market (yield around 3%) will provide more interest income (however, if you sell midway, the principal may decrease due to price fluctuations). For the 10-year floating rate bond to outperform that, it is calculated that the 10-year government bond yield over the next 10 years would need to average around 4.7% (3.09 ÷ 0.66).

What are you paying for in exchange for safety? Choosing without knowing this versus choosing while knowing it makes a world of difference in how satisfied you feel.

Pitfall 2: The assumption that you can ‘cancel anytime’

Individual government bonds, cannot be redeemed in principle for one year from issuance. Even after one year has passed, an amount equivalent to the interest for the two most recent periods (×0.79685) will be deducted.

If you buy 1 million yen at a 5-year fixed rate of 2.37% and redeem it midway, approximately 18,885 yen will be deducted. This is calculated as exactly one year’s worth of net interest disappearing. If you include your emergency savings, you will be locking in a real loss on a product that is supposed to have ‘no loss of principal’.

Pitfall 3: Leaving government bonds you already own unattended

This is the most overlooked point.

Those currently holding 10-year floating rate bonds do not need to switch. Existing bonds are also reviewed every six months. For example, the 193rd issue offered in April (currently 1.55%) will switch to a new interest rate starting November 16th, based on the same October 6th bidding results.

Those currently holding fixed-rate bonds with low interest rates should check using the following formula.

(New interest rate – Current interest rate) × Remaining years > Current interest rate

Example: Suppose you hold a 5-year fixed rate bond at 1.0% with 3 years remaining. If a new 3-year fixed rate bond is 2.10%, then (2.10 – 1.0) × 3 = 3.30 > 1.0. Even after paying the redemption cost, your net income will increase by approximately 18,000 yen (after tax) per 1 million yen. If you do nothing despite qualifying, you will spend the time until maturity with a low interest rate.

[What will happen next] Preparation so you won’t be in trouble in 3 or 5 years

When interest rates start to fall

For 10-year floating rate bonds, if interest rates fall, the interest received also decreases (the lower limit is 0.05% per year). If you want to secure a high interest rate for a long time, it is the turn of fixed-rate bonds. Precisely because no one can predict the peak of interest rates, there is meaning in holding both floating and fixed types.

When maturities come all at once

If you buy the full amount in the same month, the maturity will also arrive on the same day. If the interest rate at that time is low, you will have no choice but to reinvest everything at a low interest rate. Dividing into 3, 5, and 10 years, and staggering the purchase months—this ‘ladder’ holding method leaves options for the future.

Prices and taxes

Interest is subject to a 20.315% tax, and NISA cannot be used. The net return on 2.03% is approximately 1.62%, and even for the 5-year fixed 2.37%, it is about 1.89%. Since the August 2026 National Consumer Price Index (comprehensive) rose 1.9% year-on-year, the real return is essentially flat or slightly negative. You will not make a wrong decision if you position individual government bonds as a place to ‘keep from decreasing’ rather than ‘increasing’ your money.

Furthermore, interest on individual government bonds can be offset against capital losses from listed stocks, etc., if you choose self-assessed separate taxation. It is worth remembering this for years when you have losses on stocks, as it will change your net return.

In case of emergency

There are special provisions that allow for mid-term redemption even within one year of issuance if the holder passes away or suffers damage from a large-scale natural disaster. Keeping a note so that your family knows which financial institution you hold them at and how much you have is also a valuable form of preparation.

3 common mistakes made on the day of the announcement

October 7, immediately after seeing the numbers, is the moment when you are most likely to make a wrong decision.

• Putting the entire amount into the type with the highest interest rate: Even if the 5-year fixed looks the highest, whether that money can be left untouched for 5 years is a different story.

• Deciding based solely on the ‘2%’ figure: The net return is about 1.6%. If you don’t compare after-tax figures, you will misjudge the difference compared to deposits or other products.

• Doing nothing because ‘it might go up more next month’: In months when it doesn’t go up, the interest you would have earned while waiting simply disappears.

All of these can be prevented if you set your criteria in advance. Let’s complete the following checklist before the announcement.

Things to do by October 7 | A 5-minute checklist

1. Write down how much money you have that you don’t plan to use (excluding 6 months to 1 year of living expenses).

2. If you hold any fixed-rate bonds, check for a switch using the formula above.

3. Around 12:35 PM on October 6, check the ‘compound yield serving as the base rate’ from the Ministry of Finance’s auction results and multiply by 0.66.

4. On October 7, compare the confirmed interest rate with your own calculations.

5. Check the deadline date and time for your financial institution, and if you are splitting the amount, decide on the amount for this month.

If you finish this beforehand, you won’t be confused on the day of the announcement.

Frequently Asked Questions (FAQ)

Q1. When will the interest rate for the October 2026 individual government bond offering be announced?

It is scheduled to be announced by the Ministry of Finance on Wednesday, October 7 (usually at 8:50 AM). The offering period is from October 8 to 30, and the issue date is November 16.

Q2. Is there a way to forecast the interest rate before the announcement?

Yes. For the 10-year floating rate, you can calculate it by multiplying the ‘compound yield serving as the base rate’ published by the Ministry of Finance as a result of the October 6 10-year government bond auction by 0.66. For the 5-year fixed rate, the guideline is ‘5-year expected yield – 0.05%’, and for the 3-year fixed rate, it is ‘3-year expected yield – 0.03%’.

Q3. Will the October 10-year floating rate exceed 2%?

If the base rate (compound yield) determined at the October 6 auction is 3.03% or higher, it will be 2.00% or higher. The estimate based on market levels as of October 2 is around 2.03%, but this is not a final figure.

Q4. Which is more profitable, the 10-year floating rate or the 5-year fixed rate?

The guideline is that if you think the 10-year government bond yield will average over 3.6% for the next five years, the 10-year floating rate is advantageous; otherwise, the 5-year fixed rate is better. If you are unsure, there is a method of splitting your investment in half.

Q5. Should I wait until interest rates rise further?

Unless the 5-year fixed rate rises by 0.04% or more per month, or the 3-year fixed rate by 0.06% or more per month, you cannot recover the interest you missed out on while waiting. Since the 10-year floating rate is reviewed every six months, there is little point in waiting.

Q6. Should I switch from the individual government bonds I already hold?

For the 10-year floating rate, it is unnecessary because the interest rate is automatically reviewed. For fixed-rate types, the guideline is ‘(New Rate – Current Rate) × Remaining Years > Current Rate’. Note that you cannot redeem them for one year after issuance.

Summary | The answer will be out on October 6. The 7th is the ‘day to confirm’

• The 10-year floating rate is Base Rate (Compound yield from auction results) × 0.66. It will be in the 2% range if it is 3.03% or higher. This is a different figure from the ‘average successful bid yield’ reported in the news.

• As of October 2, the estimated rates are approximately 2.03% for the 10-year floating, 2.37% for the 5-year fixed, and 2.10% for the 3-year fixed.

• The deciding factor between floating and fixed is ‘whether the 10-year government bond yield will continue to exceed an average of 3.6%.’

• The cost of waiting is 0.04% per month for the 5-year fixed. If you are unsure, consider split purchases.

• If you hold a fixed-rate bond with a low interest rate, check it using the switching formula.

No one can change the interest rate figures themselves. However, you can decide today which type to buy, how much, and when. Start by opening the Ministry of Finance’s auction results page on the afternoon of October 6.

[Source]

Ministry of Finance: Issuance Conditions for Individual Government Bonds

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Ministry of Finance: Auction Calendar (October 2026)

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Ministry of Finance: Government Bond Interest Rate Information

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Ministry of Finance: Government Bond Auction Results

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Ministry of Finance: Frequently Asked Questions About Interest Rates on Individual Government Bonds

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Ministry of Internal Affairs and Communications Statistics Bureau: Consumer Price Index

[Disclaimer] The interest rate forecasts in this article are the author’s estimates based on market data as of October 2, 2026, and do not guarantee final figures or future investment performance. Please check the Ministry of Finance’s announcements for final interest rates and consult each financial institution for handling conditions. Please make investment decisions at your own responsibility.