HANOI, Dec. 4 (Xinhua) — Vietnam’s southern hub Ho Chi Minh City has reported a surge in hand-foot-mouth disease, with 32,637 cases recorded since early this year, up 64 percent year-on-year, local daily Tuoi Tre reported Thursday.
From…
HANOI, Dec. 4 (Xinhua) — Vietnam’s southern hub Ho Chi Minh City has reported a surge in hand-foot-mouth disease, with 32,637 cases recorded since early this year, up 64 percent year-on-year, local daily Tuoi Tre reported Thursday.
From…
HANOI, Dec. 4 (Xinhua) — Vietnam’s southern hub Ho Chi Minh City has reported a surge in hand-foot-mouth disease, with 32,637 cases recorded since early this year, up 64 percent year-on-year, local daily Tuoi Tre reported Thursday.
From…
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A pedestrian walks past the Bank of Japan (BoJ) building in central Tokyo on July 28, 2023.
Richard A. Brooks | Afp | Getty Images
Japan’s central bank is caught in a bind as soaring government bond yields risk upending its policy normalization process.
The Bank of Japan faces a stark choice: sticking with its policy of raising rates and risking even higher yields and further slowing an already sagging economy, or holding, even cutting rates to support growth that could accelerate inflation further.
Japanese government bonds have been scaling new peaks over the past month. On Thursday, yield on the benchmark 10-year JGBs hit a high of 1.917%, surging to their strongest level since 2007. The 20-year JGB yield reached 2.936%, a level not seen since 1999, while 30-year hit a record high of 3.436%, LSEG data going back to 1999 showed.
Japan abandoned its yield curve control program in March 2024, under which benchmark 10-year bond yields were capped at around 1%, as part of its policy normalization that also saw the country end the world’s last negative interest rate regime.
Now, as the country weighs increasing rates at a time when inflation has been rising — it has stayed above the BOJ’s 2% target for 43 straight months — the specter of bond yields spiking further looms large.
Anindya Banerjee, head of currency and commodities at Kotak Securities, told CNBC’s “Inside India” that if the BOJ reverts back to quantitative easing and YCC to cap bond yields, the yen may also weaken and feed imported inflation, which is already a problem.
Rising bond yields mean higher borrowing costs for Japan, further straining the country’s fiscal situation. Asia’s second-largest economy already boasts of the world highest debt-to-GDP ratio, standing at almost 230%, according to data from the International Monetary Fund.
Add to that a government that is poised to unleash its largest stimulus package since the pandemic to curb cost of living and prop up the struggling Japanese economy, and the concerns around Japan’s ballooning debt become even more stark.
Magdalene Teo, head of fixed income research for Asia at Julius Baer, said that the new debt issuance of 11.7 trillion yen to finance Prime Minister Sanae Takaichi’s supplementary budget is 1.7 times larger than that issued under her predecessor Shigeru Ishiba in 2024.
“This highlights the difficulty the government faces in balancing economic stimulus initiatives with maintaining fiscal sustainability,” Teo said.
In August 2024, an unwinding of yen-funded leveraged carry trades due to a hawkish BOJ rate hike and disappointing macro data from the U.S. saw stocks globally sell-off, with Japan’s Nikkei crashing 12.4% to record its worst day since 1987.
Carry trade refers to borrowing in a currency with lower interest rates and investing in high-yielding assets, with the Japanese yen being the predominant currency funding such trades as the country’s had a negative interest rates policy.
Now, rising Japanese yields have narrowed that rate differential, fueling concerns about another round of carry trade unwind and repatriation of funds into Japan. However, experts say that a repeat of the 2024 meltdown is unlikely.
“From a global perspective, the narrowing Japan–U.S. yield gap reduces the appeal of yen-funded carry trades, but we do not expect a repeat of the 2024 systemic unwind … Instead, anticipate episodic volatility and selective deleveraging, particularly if yen strength accelerates funding costs,” said Masahiko Loo, senior fixed income strategist at State Street Investment Management.
Loo attributes said structural flows driven by retail allocations from pensions funds, life insurance, and NISA [Nippon Individual Savings Account] anchor foreign holdings, making large-scale repatriation unlikely.
Justin Heng, APAC rates strategist at HSBC, concurred, saying that Japanese investors have shown little sign of repatriating funds, and have remained net buyers of foreign bonds.
From January to October 2025, they purchased 11.7 trillion yen in overseas debt, far outpacing the 4.2 trillion yen bought in all of 2024, according to HSBC. That surge has been driven mainly by trust banks and asset managers benefiting from retail inflows under the Japanese government’s tax-exempt investment program.
“We expect the continued decline in hedging cost, as a result of further Fed rate cuts, will also likely encourage Japanese investors to take more foreign bond exposure,” Heng said.