While the U.S. government shutdown and impending debt-ceiling debate has investors transfixed, they need to keep an eye on developments in Japan, warns Societe Generale's strategist Albert Edwards.
Edwards said in a note that a recent decline in the benchmark 10-year Japanese government bond (JGB) yield below 0.65 percent - not far from all-time lows of 0.43 percent - could be a worrying sign for Japan as well as global markets. The benchmark 10-year yield was trading at 0.657 percent on Friday.
"We believe it is always worth keeping a close eye on events in Japan, not just for its own sake, but for what that might mean for the wider global economy and markets," said Edwards.
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Japan is the world's third-largest economy and is home to one of the one of the world's biggest government bond markets. What happens in the JGB market can have wider implications for global markets.