Recently, the Japanese government bond market has been quite tumultuous. On Wednesday, the yield on the 30-year government bonds surged to 3.45%, surpassing the previous record, while the 40-year bonds also did not hold back, reaching 3.715%. To be honest, such a rise is indeed rare in the Japanese bond market.

The logic behind it is actually quite understandable – the market has been grappling with a question: how large will Prime Minister Kishida Fumio's debt stimulus plan be? Since the beginning of November, long-term bond yields have been climbing, and now it feels somewhat out of control. Japan plans to issue new national bonds worth 29.6 trillion yen (approximately 189.55 billion USD) in the fiscal year 2026; where will this money come from? With such a large scale of bond issuance, the market is bound to be worried.

On the other hand, short-term bonds have not been idle. The Bank of Japan recently hinted that it might continue to raise interest rates, resulting in a surge in short-term bond yields. By the way, Takamori Saema previously emphasized in an interview that her fiscal plan does not involve "irresponsible" bond issuance or tax cuts, but the market still seems a bit uneasy.

For those of us who are watching global assets, the recent changes in the Japanese bond market are worth noting—an upward movement in long-term yields usually indicates a decrease in the attractiveness of risk assets, which may impact the flow of funds into high-risk varieties like crypto assets.