Japan’s Bond Market Turmoil Sparks Investor Flight as Yields Hit Multi-Decade Highs
Japan's bond market is unraveling under unprecedented stress, with 30-year yields surging to 3.08%—a hair's breadth from the record since issuance began in 1999. The 10-year yield briefly touched 1.60% last week, levels unseen since the 2008 financial crisis. This isn't organic growth but panic, driven by a collapsing yen, energy shocks, and eroding confidence in the Bank of Japan.
The BOJ's yield curve control lies in tatters as investors seize pricing power. Governor Kazuo Ueda's team watches helplessly while market participants independently factor in risk premiums. With credit rating downgrades looming, Japan faces a perilous crossroads: maintain control and watch volatility explode, or relinquish it and risk total loss of monetary credibility.
