Why are Japanese 40-year bond yields staying above 4%?

Yields are elevated due to concerns over fiscal policy following an election announcement and fears of continued market volatility.

What is the Bank of Japan doing about bond market volatility?

The Bank of Japan has conducted bond buying operations and is under pressure to consider further extraordinary measures to stabilize the market.

How will the snap election affect Japan's bond market?

The snap election, scheduled for February 8, is increasing worries about market swings and the potential for further government fiscal actions.

Home / Business and Economy / Japan Bonds Surge: Yields Hit Record Highs Amid Election Fears

Japan Bonds Surge: Yields Hit Record Highs Amid Election Fears

22 Jan

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Summary

40-year Japanese bond yields remained above 4% despite recent declines.
A snap election on February 8 fuels worries of market volatility.
Investors anticipate government and central bank intervention to calm markets.

Japan Bonds Surge: Yields Hit Record Highs Amid Election Fears

The Japanese bond market is experiencing significant volatility, with the yield on the 40-year tenor remaining above 4% despite a recent drop. Investors are increasingly anxious that the government and the Bank of Japan will need to implement more substantial measures to curb this surge in yields.

A snap election scheduled for February 8 is intensifying these concerns, contributing to fears of further market turbulence and keeping the yen near recent lows against the dollar. The Bank of Japan conducted bond-buying operations as planned on Wednesday, amidst calls from political figures for stronger action.

Speculation is mounting that the Ministry of Finance might reduce the issuance of super-long bonds for the upcoming fiscal year. However, any extraordinary bond purchases by the Bank of Japan could depend on the government's tolerance for potential yen depreciation, a currency that has been underperforming.