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Japanese bond yields hit a 30-year high as markets remain wary of a worsening debt cycle in Japan

Japanese bond yields hit a 30-year high as markets remain wary of a worsening debt cycle in Japan

金色财经金色财经2026/07/08 06:28
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```htmlJinse Finance reported that on July 8, the continued depreciation of the yen combined with the implementation of a large-scale, long-term fiscal spending plan has heightened global investors' vigilance regarding the repayment pressure of the Japanese government's debt, resulting in a significant surge in Japan's overall financing costs. This year, Japanese government bonds have faced massive sell-offs, with the benchmark 10-year bond yield rising above 2.85%, reaching the highest level in thirty years since 1996. The market widely attributes this round of long-term bond decline to Prime Minister Sanae Takaichi's launch of a fourteen-year, $2.3 trillion fiscal expansion plan. In addition, skepticism over the policy pace of the Bank of Japan has also weighed on bond prices: last month, the Bank of Japan raised its policy rate to 1%, and investors worry that the central bank will tighten too slowly, allowing inflation to exceed the official 2% control target. Alex Everett, Investment Director at Aberdeen Investment, analyzed that the Bank of Japan's conservative stance on further rate hikes, the long-term weakness of the yen, and the market's pessimistic outlook on fiscal sustainability have amplified the downside pressure on long-term government bonds from three factors. Concerns about future debt risks in the market are directly reflected in the term spread: the yield premium of 10-year bonds over 2-year bonds has expanded from less than 1 percentage point in April to 1.4 percentage points currently. In comparison, mainstream bond markets such as the US and Germany have seen their long-short term spreads remain flat or even narrow during the same period, highlighting the independent downward trend of the Japanese bond market.```
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