Overview

• Yields on 30- and 40-year Japanese government bonds have climbed to their highest levels in over 25 years following auctions with the lowest demand in nearly a decade.
• Prime Minister Shigeru Ishiba cautioned that Japan’s fiscal position—public debt at around 230% of GDP and a primary deficit above 2%—is more precarious than Greece’s during its debt crisis.
• Donald Trump’s tariffs, including a 25% levy on Japanese autos and 10% duties on other imports, have undermined investor confidence and contributed to rising borrowing costs.
• The Bank of Japan, which holds about 52% of outstanding debt, has begun trimming its bond purchases and is weighing a shift toward issuing more short-term notes.
• Analysts warn that a reversal of Japan’s carry trade and reduced foreign demand could intensify global bond market volatility as domestic yields outpace the BOJ’s 2% inflation target.