Japan’s bond market has issued a stark warning to the global economy. The country’s 40-year government bond yield surged to its highest level in two decades, reaching 3.445% on Monday. This spike followed Moody’s downgrade of the United States’ credit rating from Aaa to Aa1, attributed to rising deficits and a lack of effective policy action. The effects were immediate as Japan’s 10-year bond yield also climbed to 1.47%. 2025 Q1 economic data showed Japan’s economy contracting faster than expected, marking the country’s first contraction in a year. This added to an already strained recovery period for Japan. Adding to this pressure is the Bank of Japan, facing increasing bond yields and continued inflation that hasn’t cooled down. [More Info]