Japan appears to be experincing a whiff of Liz Truss Moment. The JGB market has been melting in recent months, sending 10-year yields to their highest levels in nearly 30 years, as this chart shows.

Prime Minister Takaichis expansionary fiscal push at a time of BoJ monetary tightening, elevated inflation, and a weakened yen has shaken investor confidence, triggering the selloff in the bond market.

But unlike the UK, Japan is a large creditor nation, with ample domestic savings and limited fiscal deficit since 2024. This raises a critical question: what exactly are JGB investors worried about? And, more importantly, what comes next?