I wouldn’t say this was an “all’s well that ends well” week for the Japanese government bond market. Far from it, in fact.

Although it was certainly comforting that longer-maturity yields receded from Tuesday’s vertiginous peaks, the 40-year was still hovering uncomfortably close to 4% on Friday, a level that would’ve seemed unthinkable five years ago.

The figure below shows you the weekly range with annotations identifying key moments in the recent history of the JGB market. This week’s fireworks were of course attributable to the prospect of fiscal deterioration following next month’s snap lower-house election which is expected to see Sanae Takaichi’s LDP shore up its depleted legislative clout.

We’re talking about a near 40bps range for a security which at one point in 2016 sported a yield of 4bps (that’s four, with no zero after it).

The notations on the chart give you a sense of the escalatory nature of JGB volatility. This is what critics meant when, during the Abe-Kuroda years, they cautioned on the long-term consequences of the BoJ’s enormous footprint. Simply put: This is a fragile market.

On Friday, Kazuo Ueda and co. left rates unchanged, as expected, but the yen was whipsawed — first falling by 0.5% only to U-turn on the way to a 0.7% advance — after a BoJ rate check when USDJPY nearly kissed 160.

There was one dissent in favor of another hike on Friday, and the BoJ lifted most of its inflation forecasts while repeating language that signals additional increases to policy rates are likely. However — and this is where the problems come in for the currency — Ueda told reporters he might have to buy bonds to prevent a repeat of what happened earlier this week.

Conducting bond-buying operations works at cross purposes with efforts to tighten policy and fight inflation. This is extremely silly: The BoJ’s hiking rates (not today, but they’re in a hiking cycle), while printing money to perpetuate a circular funding scheme with the government. When the inherent contradiction manifests as yen weakness, the government sells foreign currency and buys yen through the BoJ.

I’m avowedly an MMT sympathizer in the context of developed markets and advanced economies, but the situation in Japan’s too absurd even for me to countenance. Small wonder the Japanese long-end’s in a horrible bear market, as illustrated on the right, below.

The figure on the left speaks to the same general concerns, but I’d be remiss not to call it what it is: Eye candy. When you divide something that’s up 300% over five years by something that’s down more than 50% over the same period, you get a vertical inflection.

Bottom line: Takaichi needs to be careful with debt-funded fiscal expansions. Plainly, the market’s not in the mood to look past BoJ deficit financing when inflation’s above target and the only way to keep USDJPY from screaming higher is through intervention.

On Friday, Takaichi told Nikkei the planned consumption tax cut at the center of the LDP campaign push won’t rely on new borrowing. That’s fine if it’s true. But the bond vigilantes are emboldened. And when it comes to beating them back, I worry Ueda won’t show the same fanatical resolve as his legendary predecessor.