Japan 30-Year Yield Hits Record High as AI Demand Shock Takes Toll

Japan's 30-year government bond yield soared to a record 4.235% on Monday, marking the highest level since the bond's debut in 1999. The surge followed remarks by Bank of Japan Deputy Governor Shinichi Uchida, who identified artificial intelligence as a major driver behind the rise in long-term rates. Uchida described AI adoption as a "big positive demand shock," boosting equity prices and easing financial conditions. However, he cautioned that heavy bond sales by AI-related firms have contributed to the upward pressure on yields.

Uchida also noted that AI could enhance productivity and capital accumulation over time, potentially shifting the neutral interest rate. He warned of a possible correction if AI-related profits fail to meet expectations. The yield first breached the 4% mark in May, and the BOJ's recent policy rate hike to 1.25% in September has amplified expectations of further tightening before year-end.

In the crypto market, the Artificial Superintelligence Alliance's FET token surged 15.09% in 24 hours to $0.2571, standing out among AI-linked tokens. However, other tokens like Bittensor (TAO) and Internet Computer (ICP) saw declines, indicating a lack of uniform movement. FET's trading volume reached $322.43 million, highlighting concentrated trading activity.

Analysts suggest that FET's rally may be driven by token-specific factors rather than a broader AI-crypto trend. Uchida's remarks did not directly address digital assets, but rising Japanese yields could tighten global liquidity, potentially impacting speculative investments.