Japan stimulus shakes global markets as yen sinks and crypto demand rises
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Japan’s 40-year bond yield rose to 3.774% on Thursday. Five-year CDS spreads reached 21.73 basis points on 20 November. GDP contracted in Q3 2025 and inflation reached 3% in October. Japan’s new stimulus package is setting off sharp reactions across global markets, with the yen sliding to its weakest point against the US dollar since January 2025 and long-term bond yields rising to record levels. The cabinet approved a 21.3 trillion yen package on Friday, the largest since the COVID-19 period, and the announcement immediately shifted expectations in currency, bond, and crypto markets. The scale of the support and the pressure on Japan’s finances are now pushing investors to reconsider how they assess global risk, particularly as liquidity conditions evolve. Economic reset The package focuses on easing price pressures, supporting growth, and strengthening defence and diplomatic capacity. Local government grants and energy subsidies form a key part of the plan, and households are expected to receive around 7,000 yen in benefits over three months. The government also aims to lift defence spending to 2% of GDP by 2027. The supplementary budget is expected to pass before the end of the year, although the ruling coalition currently holds only 231 of 465 Lower House seats. The support comes during a period of weakening growth. Japan’s GDP fell 0.4% in the third quarter of 2025, equal to a 1.8% annualised contraction. Inflation has remained above the Bank of Japan’s 2% target for 43 months and reached 3% in October 2025. Policymakers expect the new measures to lift real GDP by 24 trillion yen and generate a total economic impact near 265 billion dollars. Rising market pressure The fiscal boost has intensified concerns about long-term debt sustainability and market stress. Five-year credit default swaps on Japanese government bonds reached 21.73 basis points on…
Filed under: News - @ November 21, 2025 9:24 am