Japanese 10-year government bond yields reached their highest level in three decades on Thursday, driven by a sharp sell-off in U.S. Treasurys and growing concerns over inflationary pressures from a weakening yen.
The benchmark 10-year JGB yield increased by 8 basis points to 3.055%, marking the highest point since August 1996. The 5-year yield also hit a record high of 2.345%, up 7 basis points, while the 30-year yield rose nearly 7 basis points to 4.134%.
The movement in Japanese yields closely followed the surge in U.S. Treasury yields, with the 10-year U.S. note climbing to a 19-year high. According to a research note from UOB, the sell-off was fueled by rebounding oil prices, better-than-expected U.S. PMI data, and weak demand during a $70 billion auction of five-year Treasuries, which pushed U.S. five-year yields above the 5% threshold.
This development follows an earlier trend earlier in the month when Japan’s benchmark borrowing costs had already peaked at a three-decade high. That spike occurred after U.S. Treasury Secretary Scott Bessent indicated that he expected Tokyo and the Bank of Japan to take action to support the falling yen.
Oil prices spiking while debt costs rise… sounds like a tough combination for the Japanese economy. Time will tell.
Is this actually sustainable? Rates this high usually force a correction. Curious how the BOJ will respond next.
It’s all connected. US Treasuries are driving everything right now, and the yen weakness just adds fuel to the inflation fire.
Wow, a thirty-year high! That is a massive shift. I wonder what this means for regular borrowers in Japan?