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yesterday

U.S. and Japanese Bond Yields Surge to Multi-Year Highs Amid Weak Auctions and Fiscal Concerns

Record-breaking bond yields in Japan and the U.S. reflect deepening investor unease over fiscal deficits, monetary policy shifts, and weak demand for long-term debt.

Japanese national flag hoisted atop of the Bank of Japan headquarters is seen through trees in Tokyo, Japan January 23, 2025. REUTERS/Issei Kato/ File Photo
U.S. dollar banknotes are seen in this photo illustration taken February 12, 2018. REUTERS/Jose Luis Gonzalez/Illustration/File Photo
The S&P 500 on Wednesday fell for the second day in a row.

Overview

  • Japanese bond yields hit record highs after a poor 20-year auction, with 30-year and 40-year yields reaching unprecedented levels.
  • U.S. Treasury yields climbed above 4.5% for 10-year notes and 5% for 30-year bonds, driven by weak demand in a 20-year auction and mounting deficit concerns.
  • Moody’s recent downgrade of U.S. debt from AAA to Aa1 has intensified worries about America’s fiscal stability and long-term borrowing costs.
  • Japan’s Bank of Japan (BOJ) is tapering bond purchases, while calls grow for intervention to stabilize super-long JGB markets as liquidity deteriorates.
  • Global markets, including equities and currencies, are under pressure as rising yields signal increasing risk premiums and investor caution.