US EditionJapan’s Rising Long-Term Debt Costs Ripple Around the World
- Japan's long-term government bond market faced a sharp liquidity crisis in early 2025, marked by a plunge in 40-year bond demand and soaring yields across maturities.
- This crisis is driven by Japan’s unprecedented national debt approaching $7.8 trillion, resulting in a debt-to-GDP ratio of 260%, which significantly exceeds the corresponding figure for the United States.
- Economic conditions worsened as Q1 2025 saw real GDP decline by 0.7%, inflation increase to 3.6%, and a 2.1% year-on-year decrease in real wages, intensifying concerns about persistent stagflation.
- Japan’s bond market is experiencing a severe liquidity crunch reminiscent of the 2008 financial meltdown, marked by a rapid 100 basis point increase in 30-year yields to 3.20% and a loss exceeding $500 billion in value from 40-year bonds.
- As traditional markets falter, investor interest in Japan’s steady crypto sector grows, with trading volumes near JPY1.9 trillion encouraging speculation that crypto assets may become a critical financial refuge.
19 Articles
19 Articles
Japan's warning, the trade war's next phase, and Trump Media's Bitcoin buy: Markets news roundup
Demand for Japan’s 40-year government bonds plunged Wednesday to its lowest level since last July, reinforcing fears that appetite for ultra-long Japanese debt is evaporating. Read more...
Financial analysis: Investors’ focus on government debt
In recent days, one of the main themes across international financial markets was the movement in government bond yields in Japan and also in the US.The prices of the 30-year and 40-year bonds issued by the government of Japan have fallen drastically over the past few weeks.Due to the inverse relationship between a bond price...
Japan weighs tough choices as bond market volatility intensifies
Japan’s bond market is under real pressure, and both the government and the central bank are facing some of the most uncomfortable decisions in years. Borrowing costs have hit record highs, demand is collapsing, and investors are walking away. According to the Financial Times, policymakers are...
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