News and events

06.18.2025

(Not so) big in Japan

The broad sell-off in Japanese Government Bonds (JGBs) in mid-May triggered renewed concerns about Japan’s financial stability, debt sustainability, and the potential for a new wave of capital repatriation that could disrupt foreign bond markets.

​​The broad sell-off in Japanese Government Bonds (JGBs) in mid-May triggered renewed concerns about Japan’s financial stability, debt sustainability, and the potential for a new wave of capital repatriation that could disrupt foreign bond markets.


We believe these fears are overstated for the following reasons:

1) Japan’s financial stability is not at risk.

2) Japan’s debt sustainability remains sound, supported by several factors, including the large share of domestic ownership.

3) The conditions for large-scale capital repatriation from Japan are not currently in place.

Against this backdrop, we see no compelling case for JGB yields spiralling out of control.



CHIARA CREMONESI 
Senior Rates Strategist

VALERIO CEOLONI 
Senior FX/EM Strategist
 





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