Edward Conard

Top Ten New York Times Bestselling Author

  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
  • “Unintended Consequences is full of substance, it is one of the must-read books of the year, and once I finish it I will be giving it a second read through right away.” - Tyler Cowen, Professor, George Mason University
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
Upside of Inequality Oxford Unintended Consequences

AI Summary. Japan's 30-year government bond yield has risen from 2.3% to just under 3.0%, matching Germany's despite Japanese government debt of 240% of GDP versus Germany's 64%. The author argues the Bank of Japan's continued bond purchases hold yields artificially low, and that market-set yields could reach 6–7%.

Robin Brooks Robin Brooks Substack
Date Posted:

Yielding 3%, Japan’s 30-year yields are “still way too low” given a debt level of 240% of GDP. The low yields are likely driven by ongoing BoJ intervention which suppressed yield; Robin Brooks argues a market-set yield would be 6 or 7%.

Are Japan's long-term bond yields held artificially low by central bank purchases?

Core argument: Japan's 30-year government bond yield has risen from 2.3% at the start of the year to just below 3.0%, which the author argues remains far too low given gross debt of 240% of GDP.

Japanese long-term yields have risen sharply, but they're still way too low. The 30-year government bond yield is up from 2.3% at the start of the year to just below 3.0% now. Japan’s debt is 240% of GDP, so long yields - even with this rise - are still way below where they should be. In comparison, Germany’s gross government debt in 2024 stood at 64%, but Japan’s 30-year government bond yield is now at exactly the same level as Germany’s. The reason for this outlier status is the continued presence of the Bank of Japan (BoJ) in Japan’s government bond market, which keeps yields artificially low. If markets were allowed to set Japan’s 30-year yield, it would presumably rise much further, perhaps to as high as 6 or 7%. Things will get worse before they get better, meaning indebtedness will rise, which only increases pressure on the BoJ to remain active in capping yields.

Takeaways by Macro Roundup® AI

  1. Japan's 30-year government bond yield has risen from 2.3% at the start of the year to just below 3.0%, which the author argues remains far too low given gross debt of 240% of GDP.
  2. Japan's 30-year yield now sits at exactly the same level as Germany's, even though Germany's gross government debt stood at 64% of GDP in 2024.
  3. The author attributes Japan's artificially low yields to the Bank of Japan's continued presence in the government bond market, and suggests market-set 30-year yields could rise as high as 6% or 7%.

Related Articles:

  • Fiscal Space and Rising Yields — The Bank of Japan purchased all of Japan's net new government debt issuance, and more, for over a decade under its bond-buying and yield curve control programs, meaning Japanese yields were set by the central bank rather than by markets. With the central bank no longer absorbing all new issuance, yields may need to rise further to attract private buyers.
  • Japan’s 40-Year Bond Sale Draws Weakest Demand Since July — An auction of about $3.5bn of 40-year Japanese government bonds drew a bid-to-cover ratio of 2.2, the weakest demand in 10 months, amid what some traders describe as a "buyers' strike" among Japanese life insurers and other domestic investors.
  • The Japanese Government Bond Market is in Trouble — Yields on 40-year Japanese government bonds have risen by a full percentage point to nearly 3.7%, which the author attributes to inflation, long-term fiscal concerns, Japanese insurers largely halting purchases of very long-term bonds under new solvency rules, and the Bank of Japan shifting from buyer to net seller while still holding over 50% of the market.
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