Japan 10Y Bond Yield Hits Near 30-year High

Japan 10 Year Government Bond Yield increased to 2.96%, the highest since September 1996. Over the past 4 weeks, Japan 10Y Bond Yield gained 13.06 basis points, and in the last 12 months, it increased 133.36 basis points.

Japan’s 10-year government bond yield climbed to around 2.94% on Monday, moving toward 30-year highs and tracking gains in US Treasury yields as hawkish remarks from Federal Reserve Chair Kevin Warsh strengthened bets for a US rate hike in September. A jump in oil prices after the US military targeted Iranian rocket launchers preparing to deploy mines into the Strait of Hormuz also heightened inflation concerns, putting further upward pressure on global bond yields. Domestically, traders are anticipating a Bank of Japan rate increase in September amid concerns over yen weakness and import-driven inflation. BOJ Deputy Governor Ryozo Himino said last week that the central bank remains vigilant to inflation risks and will discuss the need for further policy tightening. Meanwhile, US Treasury Secretary Scott Bessent said he expects the BOJ to do the right thing on monetary policy when asked whether the central bank should consider consecutive interest-rate hikes to counter the weak yen.

Japan’s 10-year government bond yield climbed above 2.9% as investors continued to evaluate the outlook for Bank of Japan monetary policy. Markets are currently pricing in around an 87% chance of a 25 basis point BOJ rate hike in September to 1.25%, up sharply from about 23% before the central bank’s July meeting. Earlier this week, former BOJ board member Seiji Adachi said the central bank will likely raise rates next month and again as early as January, warning that keeping rates unchanged could reignite a yen selloff and accelerate import-driven inflation. Meanwhile, BOJ Deputy Governor Ryozo Himino said the central bank remains vigilant to inflation risks and will discuss the need for further policy tightening. Elsewhere, data showed Japan’s unemployment rate fell to 2.4% in July, the lowest in a year, while Tokyo’s inflation rate accelerated to a five-month high in August.