Japan’s bond jitters: Should Indian investors worry?

Japan’s government bond market has entered one of its most turbulent phases, with long-term yields soaring to multi-decade highs. The Bank of Japan has also intervened with bond purchases to calm markets.

Investors are increasingly concerned about Japan’s bond market turbulence , large budget deficits, and the challenges of tightening fiscal policy, pushing them to demand higher yields for long-dated JGBs. For a country that has lived with near-zero rates for decades, even a modest rise in yields can send ripples across global markets.

When yields on Japanese bonds rise, investors, especially large institutions, get an incentive to shift capital back home to safer, higher-yielding Japanese assets.

“When Japanese bond yields rise, global investors may shift capital away from emerging