Japan's 40-year government bond hits a 16-year high, does the bond sell-off hint at tightening global liquidity?

【BlockBeats】The Japanese bond market experienced a significant sell-off yesterday. On January 20th, the yield on Japan’s 40-year government bonds surged by 5.5 basis points on Tuesday, ultimately surpassing the 4% key level. How sensitive is this figure? It is the highest level since the bond was issued in 2007, and also marks the first time in over thirty years that Japan’s bond yields have broken through the 4% threshold.

Looking at the historical context, the last time Japanese bond yields reached 4% was in December 1995, at that time for the 20-year bonds. Now, the 40-year bonds have also caught up, indicating that upward pressure on long-term yields is real.

What are the market concerns? The market is worried about the government’s plan to cut the sales tax on food, fearing it could create a fiscal deficit. Additionally, Japan’s largest opposition party, along with former ruling coalition members forming the “Centrist Reform Alliance,” announced plans to establish a new government-related fund to fill this gap, aiming to reduce the food sales tax to zero. These policy signals, combined, have completely ignited risk sentiment in the bond market.

From a crypto trading perspective, adjustments in the global bond market usually mean increased liquidity pressure on risk assets. As the world’s third-largest economy, Japan’s bond market volatility often impacts the rhythm of global capital allocation, which can also trigger chain reactions in crypto market sentiment.