Goldman Sachs trading desk head Rich Privorotsky says long-end rate pressure has
taken on global characteristics: soft economic data can push down short rates
while long-term bond yields remain under sustained pressure. Japan is the
clearest example — the 10-year JGB yield has risen to about 2.94%, a 30-year
high, and markets are pricing faster BOJ tightening. Tokyo is trying to sustain
growth and equities, stabilize the currency, pursue fiscal expansion and keep
the yield curve anchored; Privorotsky says those aims are increasingly
incompatible. Fiscal loosening and higher nominal growth push long rates up,
while more aggressive central bank tightening would raise economic and financial
stress. He concludes Japan may ultimately need stronger monetary tightening, but
political and structural constraints after decades of deflation make that path
difficult; markets are already pricing the broader risk that central banks lose
control of long-end yields when fiscal expansion and capital demand rise.
