Japan’s 30Y Yield Hits 3.9%; Bitcoin ‘Blast Radius’ Widens
Japan’s 30-year yield hits a historic 3.91% following PM Takaichi’s fiscal pivot, triggering a global margin call that sent Bitcoin tumbling 5%.
Liquidity Evaporates in Tokyo
Japan’s government bond market experienced a historic dislocation on Tuesday, sending shockwaves through global risk assets. The 30-year JGB yield exploded 30 basis points to 3.91%, its highest level since the maturity’s 1999 debut, as reported by Wolf Street. The move forced immediate repricing across global fixed income, with the 40-year rate breaching 4% for the first time since 2007.
The catalyst was political, not structural. Prime Minister Sanae Takaichi stunned markets by pairing a promised $135 billion spending package with a suspension of the consumption tax on food. With a snap election scheduled for February 8, the fiscal loosening signals a departure from the discipline that anchored the yen carry trade for decades.
The Institutional Spillover
Hedge funds utilizing cheap yen leverage were caught offside. The violence of the move, a 42-basis point vertical climb in 48 hours, triggered forced liquidations. The blast radius extended immediately to U.S. Treasuries, where the 10-year yield pushed toward 4.29% as Japanese institutions repatriated capital to cover domestic margin calls.
The bond market is effectively the canary in the coal mine… From an investor’s perspective, it’s hard to see a scenario where buying bonds makes sense.
Crypto Correlation Tightens
Bitcoin reacted instantly to the liquidity crunch, sliding 5% as risk-off sentiment dominated the Asian trading session. The correlation highlights a critical vulnerability: crypto markets have thrived on the abundance of global liquidity anchored by Japan’s ultra-loose monetary policy. As that anchor dislodges, the cost of leverage for digital assets rises disproportionately.
Traders are now pricing in a high-volatility window leading up to the February 8 election. If Takaichi secures a mandate for her fiscal expansion, the “widow-maker” trade, shorting JGBs, may become the consensus position, likely suppressing upside for high-beta assets like Solana and Bitcoin through Q1.
