ByWilliam Pesek,
Senior Contributor.
Shorting Japan’s government bond market has long been a “widow maker” trade. Many tried it over the last 15 years; few, if any, found real success.
This last week may be the moment that Japan debt bears had been waiting for all these years. Since Monday, yields on many Japanese government bond maturities surged to the highest levels since 1999. Tokyo’s 40-year issue saw rates hit 4%, a 31-year high.
The reason: Prime Minister Sanae Takaichi’s plans to open the fiscal floodgates and champion an ever-weaker yen. Takaichi’s move to announce a February 8 snap election further spooked the market. Traders know she’s seeking a public mandate to increase public debt, which is already an unsustainable 260% of gross domestic product.
