Rising sovereign bond yields and $39 trillion US debt threaten traditional monetary policy tools amid liquidity concerns.
The US 30-year Treasury yield climbed above 5.14%, while Japan’s 10-year government bond yield hit a multi-decade high of 2.80%. The moves signal a global unwinding of carry trades as Japanese capital repatriates, increasing volatility in sovereign debt markets.
With US debt surpassing $39 trillion, aggressive monetary tightening risks overwhelming federal tax revenue with interest expenses. Analysts suggest central banks may resort to indirect liquidity injections, such as regulatory adjustments, to stabilize markets.
Traders anticipate short-term liquidations across risk assets as funds cover bond losses, with Bitcoin positioned as a potential beneficiary of prolonged liquidity shifts.