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Japan's Debt Soars: JGB Yields Rise Amid Inflation

12/20/2025

24 3 Full Breakdown

Summary

Story summary

Japan's public debt stands at about 250% of GDP, with a supplementary budget financed largely through new debt issuance.
This approach pressures the Japanese Government Bond (JGB) market and the yen.
The 10-year JGB yield has risen to nearly 2%, boosting hedging costs and weighing on sentiment.
Core inflation remains around 3% in November, above the 2% target.

History

Historical Context

Japan's economic troubles began with the bursting of its asset price bubble in 1991, leading to decades of stagnation known as the Lost Decades. By 2021, public debt soared to approximately 250% of GDP, the highest among developed nations. This ongoing debt crisis, coupled with persistent inflation and low yields on government bonds, continues to challenge Japan's economic stability and influence its fiscal policies.

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Story summary

Japan's public debt stands at about 250% of GDP, with a supplementary budget financed largely through new debt issuance.
This approach pressures the Japanese Government Bond (JGB) market and the yen.
The 10-year JGB yield has risen to nearly 2%, boosting hedging costs and weighing on sentiment.
Core inflation remains around 3% in November, above the 2% target.

1 / 2