Japan’s sovereign debt market is flashing a warning to the central bank that dialing back its bond purchases needs to be done with great care.
The issue is in sharp relief this week, with investors shunning an auction of government debt and yields soaring, just as market participants sit down with Bank of Japan officials to share views on tapering. Comments from Prime Minister Shigeru Ishiba likening Japan’s financial position to that of Greece underscore the stakes for avoiding any missteps in fiscal and monetary policy.
The rout in the nation’s $7.8 trillion government bond market, which has been building since U.S. President Donald Trump unveiled his "Liberation Day” tariffs in April, is most acute for longer-maturity debt. That part of the market has been dependent on purchases from large Japanese institutions, such as life insurers, who are now waiting for uncertainty to clear.
With your current subscription plan you can comment on stories. However, before writing your first comment, please create a display name in the Profile section of your subscriber account page.