In the middle of a French bond crisis, a Japanese fund sold every French government bond it owned. On Thursday, Japan publishes the first data showing whether it was alone.

In the 2024 yen shock, Bitcoin (BTC) and Ethereum (ETH) fell as much as 20%, which suggests the stakes this week may extend well beyond Paris.

France Is Paying Its Highest Borrowing Costs Since 2002

Shinji Kunibe runs the global bond team at Sumitomo Mitsui DS Asset Management. His funds sold all their French government bonds. The money went into German bonds and short-term Japanese debt.

His worry was France’s finances. Paris owes about 119% of its yearly economic output. Its 10-year borrowing rate touched 4.96% last week, the highest since 2002.

“When the bid from Japan disappears, the largest European sovereign market has to find new buyers at the same time its own government is arguing over a deficit plan that markets already distrust,” said Stern Drew, a commodities expert.

According to Drew, Japan may have broken the French bond market.

Yet France has not run out of buyers. It sold about €12 billion of long-term bonds on October 1. Bids came in at roughly twice that, according to France’s debt office.

What Japan’s Thursday Numbers Will Reveal

Japan’s Ministry of Finance releases weekly trading data at 8:50 a.m. Tokyo time on October 8, per its calendar. It tracks the country’s biggest banks, insurers, and funds.

The last report ended September 26, days before Kunibe’s sale. It already showed selling. Japanese investors dumped a net ¥684.5 billion ($4.3 billion) of foreign bonds that week, and ¥1.9 trillion ($12 billion) the week before, ministry data show.

Japanese investors’ weekly net trades in foreign bonds. Source: Japan Ministry of Finance. Chart: BeInCrypto

There is a catch. The report never names France. It counts every foreign bond as one pile.

Why Bitcoin Traders Are Watching Japan

For years, investors borrowed cheap yen to buy higher-paying assets abroad. This is the yen carry trade. When the yen jumps, those loans get costlier and holders are forced to sell.

The Bank for International Settlements put those trades at about $250 billion before the August 2024 crash.

But Bitcoin has survived a yen shock since. In September, the yen strengthened 3.7% in days, while Bitcoin held above $79,000, BeInCrypto reported at the time.

On Sunday, Bitcoin traded at $85,363, up 0.46% in 24 hours, according to BeInCrypto’s Bitcoin price data.

Bitcoin Price Performance. Source: BeInCrypto

Stern Drew says Japan has already broken the French bond market. On Thursday, Japan’s own numbers get their say.