🇯🇵 JAPAN'S 30-YEAR BOND YIELD REACHES A RECORD 3.209%, NEARLY DOUBLE THE LONG-TERM AVERAGE OF 1.72%

- Investors are currently demanding much higher yields to hold Japan's long-term government debt. This puts pressure on the government and the Bank of Japan (BOJ) due to:

1- Fiscal concerns: Japan's public debt-to-GDP ratio stands at 260%

2- BOJ policy changes: Reduced bond purchases and an interest rate increase to 0.50% have decreased demand for government bonds.

3. Inflation: Inflation has risen and remained above 3.0% (3.1% in July 2025), increasing expectations for tighter monetary policy.

- Although nearly double the long-term average of 1.72%, the yield of 3.209% is still low compared to the historical norms of other developed economies. Japan's yields have been suppressed for decades due to BOJ intervention, so this increase somewhat reflects a return to market-driven pricing.

- Investors are not necessarily worried that the Japanese economy will collapse at this time, but rather see this as an additional factor to previous concerns. Higher inflation may lead to higher interest rates, putting further pressure on bond prices and the economy, with borrowing costs for both the government and citizens rising, resulting in a greater debt burden.