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A fresh wave of volatility is gripping Japanese fixed income markets as 30-year Japanese Government Bond (JGB) yields surge past 3%, breaching historic levels and unsettling global investors.

Japan’s ballooning debt situation has long been a simmering concern, but it is now reaching a boiling point. With a debt-to-GDP ratio of 234%, the highest among developed economies, the fiscal strain is drawing renewed scrutiny. Comments from Prime Minister Shigeru Ishiba have catalyzed global focus, even as Japan’s debt metrics have quietly deteriorated over the past decade. Weak demand for long-dated JGBs, combined with structural concerns, has sent long-end yields sharply higher.

Traditionally, USDJPY has been more sensitive to short-term rate differentials than long-end yield dynamics. However, if this bond selloff persists and fiscal concerns deepen, we could see short-term appreciation in the yen as capital reconsiders Japan risk.

The tremors in JGBs are spilling over into global markets. US 30Y UST yields have pushed back above 5%, as investors draw parallels to America’s own debt trajectory. Trump’s latest “big and beautiful bill,” a 3.8 trillion dollar fiscal package, has been blocked, but the signal remains clear. Fiscal policy is back in the spotlight, and not in a good way.

Meanwhile, Bitcoin attempted a break above $108k today but lacked the momentum to sustain the move. Price action appears closely tied to treasury accumulation by Strategy and Metaplanet, who remain the headline buyers at current levels. There is growing concern that these entities may represent the last of the marginal bid, particularly with BTC hovering near ATHs. A slowdown in their buying could trigger profit taking from other market participants and potentially reverse the prevailing uptrend.

Despite relentless macro headwinds including surging bond yields, tariff escalations and mounting stagflation risks in the US for Q3 and Q4, BTC has demonstrated remarkable resilience over the past month. That said, a breakout to new highs could ignite a fresh wave of FOMO, dragging in sidelined retail capital and pushing prices even higher.

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