Japan’s $7.6 trillion bond market suffered a severe selloff Tuesday, with long-dated yields surging to record highs. The chaotic session, described as the worst in recent memory, forced hedge funds to unwind positions and life insurers to sell. Yields on 30-year bonds jumped 38 basis points in two days.

The rout stems from mounting concerns over Prime Minister Sanae Takaichi’s economic plans, which include tax cuts and increased spending. Investors fear these policies will strain the finances of one of the world’s most debt-burdened governments. A tepid response to a debt auction earlier Tuesday compounded the negative sentiment.

The benchmark 10-year yield rose 25 basis points, its largest single-day move since U.S. President Donald Trump’s tariff disruptions last year. This volatility signals a potential shift in global risk appetite, as Japan’s fiscal stability is a cornerstone for international investors.