Japan's Bond Market in Turmoil: Yields Soar, Economy Under Pressure
Japan’s long-term bond market is facing unprecedented volatility. In the past 45 days, the yield on 30-year Japanese government bonds has surged by 100 basis points, reaching a record 3.20%. This rapid spike has wiped out over 20% of the value of $500 billion worth of 'safe' 40-year bonds in just six weeks.
Yields on 40-year bonds, which stood at just 1.3% two years ago, have now soared to 3.5%. Analysts point to a major policy shift by the Bank of Japan (BOJ), which has ended its long-running bond-buying program. This has flooded the market with supply, pushing yields higher and prices lower.
The situation is so severe that Japan’s Prime Minister recently warned the nation’s fiscal condition could be “worse than Greece's.” As the Japanese economy slows and investor uncertainty grows, the rising yields are a signal of deeper structural issues ahead.
What does this mean for global markets? Will Japan's debt crisis spill over? Stay tuned.
