Japan's 30-year government bond yield rises 10.5 basis points to 3.145%.

Japan's 30-year government bond yield rises 10.5 basis points to 3.145%.

The yield on Japan's 30-year government bond (JGB) has surged by 10.5 basis points (bps) to 3.145%, marking a significant increase in the country's long-term borrowing costs. This uptick in yields has raised concerns about potential financial tightening and volatility in global bond markets [2].

The recent surge in Japan's 30-year bond yield is largely attributed to market concerns about fiscal profligacy ahead of the impending Upper House election in Japan later this month. Prime Minister Shigeru Ishiba's plans to distribute cash handouts have been met with skepticism from the opposition, who have called for tax cuts. Additionally, President Donald Trump's decision to impose a 25% tariff on Japan may be contributing to the stress in the market [2].

The rise in Japanese bond yields has implications for other advanced nations, where governments are also spending beyond their means. The increase in Japan's ultra-long bond yields could add to the momentum in yields in the U.S. and other countries, potentially leading to financial tightening and weighing on risk assets, including cryptocurrencies [2].

Investors are keeping a close eye on Thursday's auction of 20-year Japanese government bonds, which has a history of disappointing outcomes. The potential for volatility in longer-duration bond yields may increase later this week if the auction does not meet expectations [2].

Japan's normalization of monetary policy, which began in 2023, has contributed to the global rally in yields. The country's shift away from ultra-low bond yields has exerted upward pressure on yields across the advanced world, while also challenging the yen's role as a funding currency for risk-on carry trades [2].

References:
[1] https://www.investmentnews.com/fixed-income/treasuries-dip-ahead-of-30-year-bond-sale/261249
[2] https://finance.yahoo.com/news/japans-surging-30-yield-flashing-130325052.html