Category Japanese Bonds

Global Bond Markets Warn Global Bond Markets Warn

Global Bond Markets Warn

U.S. equities just suffered their worst session since October, but tariffs and geopolitics may be a sideshow. The real source of market unease lies beneath the surface — in global bond markets. From Tokyo to U.S. Treasuries, long-dated yields are rising sharply, challenging years of monetary suppression. When bond vigilantes stir, markets begin to question fiscal credibility, not headlines. And history shows those moments rarely stay contained for long.

Japan: Land of Rising Yields Japan: Land of Rising Yields

Japan: Land of Rising Yields

For decades, shorting Japanese Government Bonds earned the nickname “the widow maker,” destroying capital despite seemingly sound logic. Japan’s massive debt, near-zero rates, and dormant inflation suggested yields had nowhere to go but up—yet markets punished premature bets. That dynamic has now shifted. Rising yields signal a genuine regime change driven by fiscal expansion, political influence within the ruling LDP, and a decisive pivot by the Bank of Japan away from yield curve control. For the first sustained period since 2019, bondholders are being rewarded. This shift carries broad implications for global capital flows, currencies, and equity markets

Let’s not Forget About Yen Strength and JGB’s

Enjoying the ride so far? I guess it depends on how you were positioned. Even a genius can look like an idiot if they are caught out of position. Those who had excessive exposure to tech (or chips) may not be enjoying things. Most of their 2024 gains have been wiped out.
It doesn't take long when there's a rush to the exits. On the other hand - if you pivoted into value orientated names (which traded at more reasonable multiples) - things will look more positive