Yes, the U.S. had a rough 20-year auction. Yields on the 30-year almost retested their October highs, touching 5.15%. But that’s not the real story.
The real bond crisis is in Japan.
This week, Japan saw its worst 20-year bond auction since 1987. Long-end JGBs—30s and 40s—are ripping to all-time highs. Not because of inflation or growth. Because no one’s buying.
Life insurers, once the backbone of demand, are out. Solvency regulations crushed their appetite. Reinsurers are selling. The market is flooded with supply, and demand is structurally broken.
Now add fiscal stress, political risk, and an election promising tax cuts—and the bond vigilantes are wide awake.
This isn’t a local issue. Goldman says Japan’s long-end move added 80 bps of pressure to global yields. What’s happening in the U.S. isn’t just about the Fed. It’s about Japan breaking.
When the most conservative central bank starts losing control, that’s not background noise. That’s the alarm bell.
Bond dysfunction doesn’t just mean volatility.
It means inflation.
Because when buyers disappear… you print. And when you print into a supply-constrained world… prices rise.
Every. Time.
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