Something happened this week in the global economy that nearly all of us had no idea that it even occurred, let alone was potentially a big deal. That news: Very weak demand for government-issued 20-year bonds at an auction in Japan on Tuesday that sent tremors through the debt markets, pushing long-term Japanese yields – the government’s cost of borrowing – to the highest in decades.

According to the UK’s The Telegraph newspaper, there is worry of similar troubles for the UK, the US, and other debt-laden Western governments, which risks soaring rates being needed to attract new buyers, and interest on that debt crowding out almost all other spending.

“The pressure on both Japanese and US bonds this week is a sign bond traders are willing to punish high-debt nations with large deficits,” says Kathleen Brooks, an analyst at XTB.

As seen in the chart below, Japan has government debt of some 230% of its GDP – a crazy high number. But the US and the UK are in sad shape too, at 100% and 120%, respectively.

Source: The Telegraph

Meanwhile, Greece, a debt basket case a few years back, seems to be making great progress in reducing its debt woes.

In the Japan bond sale action this week, investors pushed the Japanese government 20-year yield to the highest this century, and the 30-year yield to a record. Coming soon to the US.

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