Japan's aggressive fiscal policy sparks market turmoil: government bond yields soar, Asian stocks plunge, and U.S. Treasuries rise in tandem

2026-01-21 00:10:12

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【BlockBeats】On January 21, the Japanese government bond market experienced intense volatility. The yields on 30-year and 40-year government bonds surged by over 25 basis points in a single day, with traders describing it as “the most chaotic trading day in recent years.”

The trigger for this storm was the Japanese Prime Minister’s announcement to ease fiscal austerity policies and introduce tax cuts and increased spending plans. The market immediately recalled the historical lesson from former UK Prime Minister Truss in 2022—her aggressive fiscal policies led to a sharp decline in the pound, runaway government bond yields, and nearly caused a collapse of the financial system.

Panic quickly spread across the market. Weak 20-year government bond auctions forced hedge funds to cut losses and close positions, while life insurance companies faced enormous pressure. This turbulence did not stay confined to Japan; U.S. Treasury yields soared to multi-month highs.

The ripple effect extended to the stock markets. According to trading data, the Nikkei 225 index opened down 718.60 points, a decline of 1.36%, closing at 52,272.50 points; the KOSPI index in South Korea also fell, opening down 74.42 points, a decline of 1.52%, closing at 4,811.33 points. This global financial market reaction once again reminds investors: the shockwaves from policy changes can transmit across the world in an instant.

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VitaliksTwin

· 1h ago

Japan is at it again. Can't you learn? Is the lesson from Tesla's failure just given for free?

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GasFeeCrier

· 19h ago

Coming again? Truss's show hasn't finished yet, and Japan wants to put on the same performance now.

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PancakeFlippa

· 19h ago

Japan is playing with fire again, still haven't learned from the lessons of Truss Both tax cuts and money printing, they really dare to do it Now it's good, US bonds are also jittery, the whole world will suffer along The Nikkei plunge is just the appetizer, there are even more intense moves ahead It feels like something's going to happen, everyone, handle it as you see fit

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BlockImposter

· 19h ago

Damn, Japan is really about to follow the UK’s footsteps this time. The lesson from Truss is still fresh in memory. Japan is about to implement aggressive policies again. Will they be able to stabilize this time? It feels uncertain. The 30-year bond yield is skyrocketing directly. How much must the traders be collapsing? U.S. bonds are also soaring, and the whole world has to tremble along. The Nikkei 225 is crashing directly. Luckily, I didn't buy the dip. Once aggressive policies are announced, the market starts looking for historical benchmarks. It’s never a good sign. Hedge funds are about to bleed again, and life insurance companies are even worse. Really, every time I see the words "fiscal easing," I think of Truss, and it makes me uneasy. This time, even U.S. bonds can't stop it. Global risk assets might have to go through a washout. Weakness in government bond auctions is a very strong signal, indicating that the market simply isn’t buying it.

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SelfStaking

· 19h ago

Japan is stirring again, repeating the Truss script. Is it Japan's turn this time? Oh my, the national debt yield skyrocketed by 25bp in one day. How panicked must that be? It's again tax cuts and increased spending, and aggressive fiscal policies. History just loves to repeat itself. The Nikkei fell 1.36%, which is still mild. There are more dramas to come. While watching the show, remember to protect your assets, everyone. I'm truly amazed. A single policy can trigger the entire market. It's too fragile. U.S. Treasury yields also surged, and the contagion effect is so fast that there's no escaping it. Hedge funds are cutting losses and closing positions, indicating that big players are also panicking. Wait, isn't this a positive signal for certain crypto assets? When the market is chaotic, there might be opportunities. Truss was so unpopular back then. Can't Japan learn from that?

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CryptoPhoenix

· 19h ago

Wait, Japan is also starting to play aggressive fiscal policies? Haven't you learned enough from Truss's lessons? This time, it's really going to crash. It's falling again and again, but have you ever thought that this is precisely a signal of value returning? The bottom range is right in front of us; patience is the winning mindset. Having experienced the 2018 halving, what is this fluctuation? It actually gives us an opportunity to build positions. After falling so much, hedge funds are all cutting losses. On the other hand, could this be institutions cleaning out their chips? Think this way through the cycle. Don't be hijacked by panic emotions. Remember, the most important thing when losing money is to stay clear-headed. Rebirth from ashes is never easy. Can this wave of decline become the foundation for the next rally? The key still depends on how firm your faith is.

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ResearchChadButBroke

· 19h ago

Playing with fire in Japan, the whole world suffers. This trick is really familiar. Have you not learned your lesson from Truss yet? Here we go again. Damn, my position is green again. Japan, what are you doing? Tax cuts and increased spending? Isn't this just pouring water into a dam? It will burst sooner or later. The yield on government bonds is so crazy, something is really going to happen. The Nikkei has already fallen, and our US bonds can't sit still either. We're all on the same rope. 20-year bonds are no longer selling, the institutions are really panicking. It's fiscal stimulus again, and government bonds are collapsing. This script looks a bit familiar. This time Japan won't follow in Truss's footsteps, it feels a bit uncertain. Stop-loss and close positions, hedge funds have already given up. Why am I still holding on?

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AirdropBuffet

· 19h ago

Once again, aggressive policies are causing trouble. Japan's recent moves really show they haven't learned enough from Truss's lessons. They sold some Japanese bonds, and this rhythm feels a bit like the 2022 drama, but this time it’s affecting the whole world, with US bonds also becoming volatile. Treasury yields surged by 25 basis points. My goodness, how tough must it be for traders? This is truly the black swan event. The Nikkei's plunge isn't surprising, but the question is, when will this turmoil settle... Brothers holding positions, be careful. Wait, is this decline actually not that bad? Compared to the craziness in the bond market, the stock market's reaction seems surprisingly calm.

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