Big Take Japan’s Bond Crash Sent Shockwaves Through Global Markets
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Jan 27, 2026 Ruth Carson, Bloomberg reporter on Asia FX markets, explains the shock from Japan’s bond market turmoil. She traces the chain from a weak auction and thin liquidity to sudden sell-offs. She discusses who gained and lost, policy responses, political and fiscal risks, and how JGB moves ripple through global borrowing and currencies.
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Lunch Break And A Market Volcano
- Ruth Carson describes returning from lunch to a flood of alerts about record selling in Japan's super-long bonds.
- She recounts yields spiking and the 40-year rate topping 4%, showing how quickly markets erupted.
Japan's Low-Rate Anchor Has Broken
- Japan moved from decades of near-zero rates to multiple BoJ hikes in 2024, creating vulnerability in bond prices.
- Rising rates make older, low-yield JGBs lose value and amplify market sensitivity to shocks.
Tiny Trades, Huge Consequences
- A weak 20-year auction and thin liquidity let roughly $280 million of trading trigger a $7 trillion market meltdown.
- The episode revealed how fragile liquidity had become in the JGB market.