INSUBCONTINENT EXCLUSIVE:
Japanese government bond (JGB) yields have climbed to their highest levels in decades, driven by weakening demand and a shift in the Bank of
The 30-year JGB yield hit a record 3.14%, the 40-year yield reached 3.6%, and the benchmark 10-year yield rose to 1.525%, the highest since
(Photo Internet reproduction)Analysts attribute this to rising yields making bonds less attractive compared to alternative investments,
central bank is set to review its quantitative tightening plan at its June 16-17 meeting, with some market participants urging increased
purchases of long-term bonds to stabilize yields.Political uncertainty compounds these challenges
With the Tokyo Metropolitan Assembly election in June and the upper house election in July, opposition parties are pushing for consumption
ContextUnlike Greece, Japan benefits from issuing debt in its own currency and strong domestic demand for JGBs, with over 90% held by local
This insulates the country from external creditor pressures.However, an aging population is straining social security spending, and the
ImplicationsRising JGB yields could have ripple effects
If Japanese investors repatriate funds from overseas assets, such as U.S
fiscal 2025, lowered to 0.5% from 1.0%, cites trade risks and policy uncertainty as additional headwinds.OutlookJapan faces a delicate
The BOJ must navigate monetary normalization without triggering market instability, while the government addresses fiscal pressures from an
aging population and potential tax policy changes.Analysts suggest that structural reforms, such as increasing labor force participation or
streamlining public spending, could ease long-term risks
international financial markets.
