On May 26, according to The Kobeissi Letter's analysis, the 30-year Japanese government bond yield surged 100 basis points within 45 days, reaching a record high of 3.20%. This means that "safe" 40-year Japanese government bonds worth over $500 billion have fallen more than 20% in 6 weeks.
Notably, two years ago, the 40-year Japanese government bond yield was around 1.3%, and it is currently at 3.5%.
The Kobeissi Letter stated that this surge began with a major policy shift by the Bank of Japan (BOJ). After years of bond purchases, the BOJ stopped buying bonds. This led to more bond supply entering the market, thereby driving up yields.
Last week, the Japanese Prime Minister warned that its fiscal situation is "worse than Greece". As the Japanese economy slows down and uncertainty rises, yields are accelerating upward. This will cause significant damage to the Japanese economy.
