On Monday, August 24th, the global bond market is currently undergoing a repricing process driven by fiscal pressure, inflation expectations, and long-term financing needs. The yield on 30-year US Treasury bonds has recently risen to near its highest level since 2007, while yields on ultra-long-term Japanese government bonds have also continued to rise, and long-term bond yields in major European economies are under pressure. Market focus is shifting from short-term monetary policy to longer-term fiscal sustainability issues. Against this backdrop, Japan's upcoming issuance of 10-year and 30-year government bonds is attracting significant market attention. Given the increasing linkage between the Japanese and US bond markets, a significant change in demand for ultra-long-term Japanese bonds could influence global investors' reassessment of the risk premium for long-term debt assets. Currently, the US Treasury is attempting to improve the long-term bond market environment by expanding long-term bond repurchase agreements, but market feedback indicates that a single policy measure is insufficient to fully offset the impact of widening fiscal deficits, increasing debt, and rising term premiums. The global bond market is entering a phase where fiscal constraints are becoming increasingly important.

Japanese government bond auctions serve as a window into the global bond market.

Two upcoming Japanese government bond auctions have become a focus of market attention. Japan will issue 10-year bonds on September 1st and 30-year bonds two days later. For investors, these two issuances not only reflect domestic demand for government bonds but may also serve as an important reference for assessing global long-term interest rate pressures. Due to Japan's long-term low-interest-rate environment, many domestic investors hold overseas bond assets for extended periods. When Japanese long-term bond yields rise rapidly, some funds may reassess the value of overseas asset allocation, thus impacting the US long-term Treasury market. Nomura Securities strategist Andrew Teshurst stated that the market will closely watch the upcoming Japanese government bond auctions. If the auction performance is weak, Japanese government bond yields may continue to be under pressure, while higher domestic bond yields could enhance the attractiveness of Japanese bonds to domestic investors and further impact the US Treasury market. On August 20th, the Japanese government issued 699.5 billion yen in 20-year bonds maturing in 2046, with a winning bid yield of 3.698%, indicating moderate demand. However, the yield on 20-year Japanese government bonds remained near its highest level since 1996, indicating that the market's demand for a risk premium on long-term bonds is increasing.

Fiscal pressure is becoming a core variable in global long-term interest rates.

Over the past period, the common theme in the global bond market has shifted from central bank policy to fiscal factors. The US, Japan, and major European economies are all facing issues such as increasing government debt, rising financing costs, and the repricing of long-term interest rates. The yield on the 30-year US Treasury bond recently rose to 5.34% before falling back to around 5.24%, still at a relatively high level since 2007. Meanwhile, German long-term bond yields have reached near 15-year highs, and French long-term financing costs have also risen to their highest levels since 2008. This change reflects investors' increasing demands for risk compensation in long-term government bonds. For a considerable period, major global economies relied on a low-interest-rate environment to reduce debt financing costs; however, as the interest rate environment changes, the impact of debt size on fiscal budgets is gradually expanding. Naoya Hasegawa, a strategist at Okazo Securities in Japan, stated that fiscal issues and inflation are becoming common themes in the Japanese, US, and European markets, and changes in Japanese yields could impact global markets. From a market mechanism perspective, long-term government bond yields are influenced not only by central bank policies but also by investors' judgments on the future fiscal path. When the market anticipates that the government's future financing needs may increase, investors typically demand higher yields as compensation, thereby driving a readjustment of long-term bond yields.

The US long-term Treasury bond market faces a struggle between policy adjustments and market forces.

Faced with rising long-term Treasury yields, the U.S. Treasury Department recently took measures to try to improve market conditions. Treasury Secretary Scott Bessant previously announced an expansion of the long-term Treasury repurchase program, hoping to alleviate pressure on long-term yields by adjusting the bond supply and demand structure. Following the policy announcement, the U.S. Treasury market briefly improved, but yields subsequently rebounded, indicating that market focus remains dominant on long-term fiscal factors. The core contradiction in the long-term Treasury market lies in the fact that policy tools can influence short-term supply and demand, but are unlikely to directly change long-term trends in debt size, fiscal deficits, and investor risk appetite. Furthermore, Federal Reserve Chairman Kevin Warsh will deliver a speech during the central bank's annual meeting, and the market is also paying attention to his views on inflation, monetary policy, and balance sheet management. However, from the perspective of the bond market, changes in long-term yields depend not only on monetary policy expectations but also on the market's judgment of the fiscal path.