Featured News Headlines
Japan’s Stimulus Shocks Markets: Record Bond Yields Threaten Risk Assets and Crypto
Japan’s government bond yields have soared to record highs, shaking global markets and raising eyebrows in the crypto world. Following the announcement of a $110 billion stimulus package, investors witnessed a dramatic spike in yields, challenging conventional economic expectations.
Record-High Yields and the Yen Carry Trade Collapse
The 40-year Japanese government bond jumped to 3.697%, its highest since 2007, while the 30-year yield hit 3.334% and the 10-year climbed 70 basis points in the past year. The surge comes despite the government aiming to counter inflation and boost growth with a stimulus exceeding 17 trillion yen.
Analyst Shanaka Anslem Perera noted that the move represents a vote of no confidence in Japan’s sovereign debt sustainability, with the country’s debt standing at roughly 250% of GDP. Rising yields threaten the $20 trillion yen carry trade, a strategy where global investors borrow in low-yield yen to invest in higher-yielding assets abroad. As borrowing costs rise and the yen strengthens, leveraged positions are forced to unwind, amplifying global market volatility.
Implications for Bitcoin and Risk Assets
The ripple effects extend to cryptocurrencies. As investors repatriate capital to Japan, risk assets—including Bitcoin (BTC)—may face downward pressure. Perera highlighted that during prior liquidity crunches in 2015, 2018, and 2022, Bitcoin fell not due to weakness but due to shrinking liquidity. With institutional demand cooling and ETF inflows softening, Bitcoin could encounter another sharp pullback if this trend continues.
The Critical Test Ahead
The next key moment will be the November 20 auction of 40-year Japanese bonds. Weak demand could exacerbate the cycle of rising yields, forced selling, and declining risk appetite, further impacting both equities and cryptocurrencies. Analysts warn that investors should watch these developments closely, as global liquidity dynamics shift dramatically.
