The Converging Debt Crisis: Mounting Fiscal Pressure in the US and Japan

Japan’s sovereign debt has reached unprecedented levels, exceeding 250% of its GDP—the highest debt-to-GDP ratio of any major economy globally. For three decades, this staggering figure remained manageable due to Japan’s ability to secure near-zero interest rate financing. However, the era of cheap borrowing is ending. As benchmark yields climb to 3%, reaching a threshold not accounted for in the Ministry of Finance’s budgetary projections, the sudden shift is causing significant market instability.

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