US and Japanese Bond Yields Surge as Markets Question Public Debt Credibility

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โดย Prachachat·USJP·Read original
Summary · why it matters

The government bond market is the hot topic in global finance after 30-year US Treasury yields climbed to their highest level since the subprime crisis in 2007, while 10-year yields edge ever closer to 5%, also the highest since 2007, excluding the period of rate hikes by the US central bank, the Fed, in 2023. Japan is facing significantly elevated bond yields as well, with 10-year Japanese government bond yields breaking through 3% to set a new 30-year high, as did 30-year Japanese government bond yields. The main driver is that markets are questioning the credibility of borrowing countries amid sharply higher public debt across all countries since the COVID-19 crisis. US public debt now stands at a record 40 trillion dollars, roughly 120% of GDP, while Japan's public debt is as high as about 200% of GDP. Both countries also plan continued fiscal deficits amid the Fed's high interest rates and the Bank of Japan's upward interest rate trend, which will further compound the growth of public debt. Some investors are selling bonds and adjusting their portfolios, with knock-on effects pressuring both the US dollar and the Japanese yen toward weakness in recent months. And it is not only the US and Japan: other countries whose public debt has risen sharply and sits at high levels face similar risks.

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