As havens go, Japan sure is an odd case. You would think that having the developed world's largest public debt, an aging and shrinking population, deflation, few natural resources and the ever-present risk of a giant earthquake might give investors pause.

Since the global crash of 2008, though, they can't get enough of the place. As a recession takes hold in Europe and the U.S. limps along, demand for yen assets has exploded. This is giving Finance Minister Jun Azumi and Bank of Japan Governor Masaaki Shirakawa fits as they confront pressure to halt the yen's 33 percent surge since the collapse of Lehman Brothers Holdings Inc.

Try as they might, there is little they can do. The yen is in vogue because the dollar and euro look uglier, and its rise is beyond the control of the government or central bank. Yet something is afoot that might reverse the yen's climb in ways Japan might not like, thanks to the world's largest pension fund.

Demographic trends are prompting Japan's Government Pension Investment Fund to trim its debt holdings. That's huge news in bondland. The fund oversees $1.45 trillion of assets, an amount greater than China's holdings of U.S. Treasuries and more than most sovereign-wealth funds have to invest. This bond whale makes the $263 billion Total Return Fund run by Bill Gross of Pacific Investment Management Co. look like a minnow.