Japan’s Debt Reckoning Sends Shockwaves Through Global Markets

Japan's financial markets are flashing warning signs with global implications. The Bank of Japan has begun unwinding its unprecedented monetary stimulus, announcing plans to sell ¥79 trillion ($500 billion) in ETF holdings—a MOVE without precedent among major central banks.

The nation's debt burden now stands at 235% of GDP, with 10-year bond yields breaching 1.6% for the first time in decades. This debt spiral threatens to consume an ever-growing portion of Japan's budget through interest payments alone.

The implications extend far beyond Tokyo. The U.S. faces a parallel trajectory with its $37 trillion debt load, representing 120% of GDP. As both economic powerhouses grapple with fiscal sustainability, market participants worldwide are reassessing risk appetites across asset classes.