Japan's Bond Yields on Verge of Sparking Global Debt Crisis

Japan's bond yields are rising, and if they continue to climb, it could have far-reaching consequences for global financial markets. The Japanese government issues a type of bond called the JGB, and its 10-year yield is currently trading at 2.9%. However, according to one model, this yield should be around 4.5%.

If yields move towards 4.5%, it could lead to a decline in the yen carry trade, which involves borrowing cheaply in Japan and investing in higher-yielding assets elsewhere, such as US Treasuries. This could reduce demand for US Treasuries and push up borrowing costs worldwide.