Group 1 - Japan's $7.8 trillion government bond market is undergoing a historic transformation, with long-term bond yields rising rapidly, particularly the 30-year yield reaching 2.985% and the 40-year yield hitting a record high of 3.47% [1] - The Bank of Japan is at a pivotal policy turning point, having reduced bond purchases as the economy emerges from deflation, but local institutional investors remain hesitant to step in [1][2] - The yield curve steepening is not only a sign of changing monetary and fiscal paradigms in Japan but also reflects broader global trends affecting bond markets [1][6] Group 2 - Japan faces dual pressures of soaring debt servicing costs and sluggish economic growth, complicating fiscal stimulus and defense spending decisions ahead of the July Senate elections [2] - The market is experiencing extreme polarization, with predictions of the 30-year yield surpassing the psychological 3% barrier, while others believe liquidity issues may have led to a peak in long-term yields [6] - The ongoing rise in ultra-long-term yields could increase costs for corporate loans and mortgages, although banks may benefit from an expanded interest margin [7] Group 3 - The net supply of ultra-long-term bonds has significantly increased this fiscal year, but the absence of demand from life insurance companies is exacerbating market supply-demand imbalances [10] - Foreign investors have recently increased their holdings in Japanese equities, but their share remains relatively small compared to domestic institutional investors [10] - The current bond market turmoil is spilling over into the real economy, with rising mortgage rates, while banks may see rare benefits from an expanded lending margin [14]