Japan Bond Yield Surge Could Spill Over Into Global Risk Assets

CoinDesk reported that Japan's government bond market has seen persistent upward pressure, with key yields climbing to levels not seen in decades. With the Japanese government expanding long-dated issuance and the Bank of Japan (BOJ) gradually scaling back bond purchases, investors are re-evaluating the odds that global funds could be repatriated to Japan—a shift that could ripple through risk assets worldwide. Long-end yields hit multi-decade highs Japan's 10-year government bond yield has risen to 2.84%, the highest in more than 30 years. Over the past year, the yield is up 137 basis points, with an additional jump in recent weeks. Increased long-term issuance has also pushed the 20-year yield to its highest level in 30 years. The yen remains near a 40-year low versus the U.S. dollar. The combination of bond and FX moves is fueling expectations of higher market volatility. BOJ steps back as supply shifts to the market For years, the BOJ was the dominant buyer of Japanese government bonds, holding down borrowing costs through large-scale purchases and helping the government issue debt in a low-rate environment. That dynamic is changing. As the BOJ reduces buying and the government prepares to raise long-term issuance, supply once absorbed by the central bank is increasingly being taken up by private investors, adding upward pressure to yields. Yen carry trades face mounting strain Over time, ultra-low yen rates made the currency a key funding source for global carry trades, with investors borrowing cheaply in yen and deploying capital into higher-yielding or higher-beta assets such as U.S. equities, bonds, real estate and Bitcoin. The report estimates the global yen carry trade at roughly $1.2 trillion. If Japanese yields continue to rise, some capital could rotate out of overseas positions and back into Japan, weighing on global risk-asset valuations. In June 2026, foreign investors were net sellers of Japanese government bonds by about $19.2 billion, or approximately ¥3.12 trillion—one of the largest monthly outflows since early 2023. The report argues that sustained volatility in Japan's bond market could intensify pressure on global equity and crypto markets if it accelerates additional capital outflows. For crypto, the article ties the recent pullback to this macro backdrop, while noting Bitcoin has since rebounded. The latest price is above $63,000, up about 7% over the past week.