#JapanBondMarketSell-Off

✨The Japanese bond market was rocked by a sudden sell-off following Prime Minister Sanae Takaichi’s promise to cut the food consumption tax and expansionary fiscal policies ahead of the upcoming early election. This led to long-term bonds (particularly 30 and 40-year yields) reaching record highs in the country’s $7.6 trillion bond market; the 40-year yield exceeded 4% for the first time, reaching its highest level in 30 years. Investors sold off bonds amid concerns that fiscal discipline would weaken in the face of Japan’s already massive public debt burden (approximately 250% of GDP); this pushed 10-year yields to 2.38% and 20-year yields to 3.47%. This sharp sell-off in the market also pushed up US and European bond yields, creating volatility in global debt markets and serving as a warning that Japan's long-standing low interest rate regime was coming to an end.
🔹🔸🔹Japan Public Debt Details🔹🔸🔹
Japan is one of the countries with the highest public debt burden in the world, with central government debt of approximately 1.33 trillion yen (approximately 9 trillion USD) as of 2025. This debt is equivalent to approximately 230-236% of GDP (236.7% at the end of 2024, estimates around 230%). The majority of the debt is domestic debt, with more than 88% held by domestic investors: the Bank of Japan (BOJ) has the largest share (around 46%), followed by insurance companies (15-16%) and banks (14-15%). The share of foreign investors is limited. Social security spending and debt interest payments account for nearly 60% of the budget, with the 2026 fiscal year budget approved at a record 122.3 trillion yen, and debt servicing costs rising by more than 10% due to increasing interest rates. While Japan's massive public debt has remained manageable for years thanks to a low interest rate environment and the BOJ's bond purchases, risks are increasing as interest rates rise.