Macro Markets Sees Japan’s Spike in 30-Year Yields as a Cautionary Signal for Risk Assets

Japan’s Bond Yields Spike, Stirring Fears for Global Risk Assets

Japan’s government bond market is sending fresh warning signals to global investors, as surging long-term yields spark concerns about potential turbulence for risk assets, including equities and cryptocurrencies.

Over recent days, yields on Japan’s 30-year government bonds have climbed more than 30 basis points, crossing the 3% threshold for the first time since late May, when they hit 3.20%, TradingView data shows. Meanwhile, the 40-year yield has risen nearly 15 basis points to 3.36%.

The sudden uptick reflects growing anxiety over Japan’s fiscal outlook as the country heads toward Upper House elections. Prime Minister Shigeru Ishiba has defended plans for cash handouts, while opposition parties advocate tax cuts — stoking fears of expanded fiscal deficits.

Adding to market jitters, U.S. President Donald Trump recently announced a new 25% tariff on Japanese goods, increasing economic pressure on Japan and further unsettling investors.

Ripple Effects on Global Markets

Japan’s spike in ultra-long bond yields threatens to reverberate across global markets. Rising yields in one of the world’s largest economies could push borrowing costs higher elsewhere and sap investor appetite for riskier assets.

Crypto markets are watching developments closely. Traders keep a sharp eye on the MOVE index — a measure of volatility in the U.S. Treasury market — which has historically shown an inverse relationship with bitcoin. Significant tops in bitcoin prices often align with low readings in the MOVE index, and the recent yield surge could hint at shifting risk dynamics.

Key Auction Looms This Week

Markets are bracing for Japan’s upcoming 20-year government bond auction on Thursday. Bloomberg reports that these auctions frequently see weak demand, raising the possibility of more volatility in long-term yields if buyers shy away.

End of an Era for Ultra-Low Rates

For decades, Japan’s aggressive monetary easing kept bond yields near record lows, helping anchor global interest rates and supporting the yen’s role in carry trades. But since 2023, the Bank of Japan has begun normalizing policy, leading to a steady rise in yields and signaling an end to Japan’s ultra-low-rate era.

Investors now wonder how far this shift could ripple across global financial markets — and how much strain risk assets can withstand in the process.