Bitunix Analyst: Japanese Government Bonds Become New Source of Global Volatility, Influx of Foreign Capital Intensifies Risk Transmission

According to reports, overseas investors are entering the Japanese government bond market at an unprecedented rate, with their trading volume accounting for as much as 65%, significantly higher than the 12% seen 15 years ago. As the Bank of Japan reduces bond purchases and the government introduces large fiscal plans, foreign capital has become a major force driving yield increases and volatility expansion. The 30 to 40-year Japanese bond yields have reached multi-year highs, signaling Japan's shift from an ultra-stable market to a global volatility exporter.

Although domestic institutions in Japan still hold over 80% of outstanding government bonds, providing some stability, the high turnover rate and low fund stickiness of foreign capital could lead to rapid withdrawals triggering chain pressures, potentially transmitting to US, UK, and European sovereign bonds. With inflation still above the 2% target, if the Bank of Japan raises rates again, it will further increase global interest rate volatility.

Bitunix analysts stated: This week, the market will focus on both the Fed's rate cut signals and the momentum of foreign capital in the Japanese bond market. The Fed's statements on future rates and liquidity, combined with the high volatility structure of the Japanese bond market, will collectively shape short-term global risk appetite trends.

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