Bond Market Bears Bite Hard as Japan's JGB Yield Hits 30-Year High

The global bond market has entered a bear phase, with long-term yields reaching their highest level since the 2008 financial crisis. Japan's 10-year government bond yield surged to 3% for the first time since 1996 on Tuesday, while the 30-year JGB yield topped a record 4.18%. The US Treasury Secretary Scott Bessent recently announced an increase in debt buyback transactions, which has raised concerns about debasement and led some commentators to compare it to a form of yield curve control.

Industry expert Arthur Hayes has argued that the Federal Reserve will eventually use its Foreign and International Monetary Authorities (FIMA) repo facility to provide dollar liquidity, which could strengthen the Japanese yen without causing a sovereign bond crisis. This mechanism would allow Japan's Finance ministry to borrow dollars against its Treasury holdings and sell them for yen. Some commentators believe this scenario is being priced in by rising long-term yields.

Despite these developments, Bitcoin has been trading sideways near the $78,000 mark, stuck between a thick patch of resistance and a target price of $86,000. The S&P 500 index futures sold off by 0.3% on Tuesday, while oil prices rose more than 2% due to renewed tensions in the Iran war.