Recent tremors in the $7.3 trillion Japan government bond market have raised fears that a debt crisis is brewing in the world’s fourth largest economy.
Japan’s debt is already more than 200% of GDP, and Prime Minister Sanae Takaichi’s plans for fresh fiscal stimulus are expected to deepen the hole. With snap elections coming up Feb. 8, her opponent is also promising a similar agenda as economic growth remains muted.
Investors have started to balk, with JGB yields surging lately amid a string of weak debt auctions over the past year. Last month, bonds tumbled so much that yields spiked about 25 basis points in a single session, prompting Treasury Secretary Scott Bessent to call his Japanese counterpart as panic began to…