Bond Yields Soar as Fed and BoJ Hike Rates in Global Sell-Off

US and Japanese bond yields have hit multi-decade highs after the Federal Reserve (Fed) and Bank of Japan (BoJ) raised interest rates. The US ten-year government bond yield rose to 5.18% this week, while Japan's ten-year government bond yield reached about 3.08%, a level last seen in 1996.

The Fed had increased its target range by 25 basis points to 3.75%-4% on September 16, its first hike since 2023. The BoJ raised its rate to 1.25% on September 18. Stronger US activity and rising business costs reported in September's PMI added to expectations of further Fed tightening.

The US and China extended their trade truce to January 2027, with the two countries identifying $30 billion of imports in each direction for proposed tariff relief. The lists cover Chinese toys, appliances, and baby products entering the US, as well as US agricultural goods, medical devices, and coal entering China.