BOJ Rate Hike Bets Hit 90% as JGB Yield Tops 30-Year High

The yield on Japan's 10-year government bonds (JGB) has reached its highest level in nearly 30 years, exceeding 3% for the first time since September 1996. The benchmark indicator for long-term interest rates briefly breached the 3% threshold on September 1.

This sudden rise in JGB yields has triggered a surge in housing loan inquiries as financial institutions field calls from individual customers seeking guidance on whether to switch to fixed-rate loans or remain on variable rates. Variable-rate loans are linked to short-term interest rates, which would increase monthly repayments if the BOJ raises rates.

The market is now pricing in a greater than 90% probability of a rate hike at the Bank of Japan's (BOJ) September meeting, with some analysts warning that long-term yields could significantly exceed 3%. Finance Minister Satsuki Katayama declined to comment on Treasury Secretary Bessent's remarks as pressure on the BOJ to raise rates.