Japan's government bond market is in turmoil. Yields surged across the curve, with the 30-year JGB yield touching 4% for the first time since the instrument's launch in 1999.
The selloff intensified as the 30-year yield climbed roughly 30 basis points to 3.92%, and the 40-year yield reached 4.24%. Both are record highs. The 10-year yield rose to 2.38%, a level unseen for decades, far above the Bank of Japan's previous cap of 0.5% under yield-curve control.
With a debt-to-GDP ratio of approximately 230%, Japan's financing cost is rising rapidly.
Japan holds roughly $5 trillion in overseas assets. As the world's largest net foreign creditor, institutional investors like the $1.8 trillion Government Pension Investment Fund are reconsidering allocations. A shift of capital back into JGBs could push US and European yields higher.
For crypto, rising bond yields typically tighten financial conditions and reduce liquidity for risk assets like Bitcoin, which historically rallies when liquidity is abundant.