Japan has the highest government debt relative to GDP among major economies and is facing challenges in maintaining its previous levels of public spending.

The country has relied on debt-driven public spending supported by low interest rates to address various issues, such as aiding struggling farmers and providing support during the Covid-19 pandemic. However, as the government continues to spend, it also needs to fund social security for an increasing elderly population. The national debt has soared to nearly $9 trillion, over twice the size of Japan’s economy.

Currently, ahead of a contentious summer election, the ruling party is being urged to take on more debt. Small businesses affected by U. S. tariffs and households facing rising prices are increasing pressure for government assistance. As the Bank of Japan moves away from negative interest rates, limits on spending become more evident. Recently, there have been signals of concern regarding Japan’s fiscal situation in the government bond market. A sudden surge in JGB volatility is drawing fresh attention from global investors and hedge funds alike. With the BoJ’s policy shift underway, Japan’s Government bond market – historically considered safe – is now marked by ever-increasing risk.

At TraditionData, we provide one of the most comprehensive and high-frequency data sets on JPY interest rate derivatives and cash products, sourced directly from the most active interdealer in the Japanese market. From JGB forwards and swaps to basis and volatility data, our coverage offers a real-time lens into price discovery as this critical market evolves.

Japanese Government Bonds
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