Japan Bond Yield Hits 3% Amid Oil Price Shock and Inflation Fears

The 10-year Japanese government bond yield has been closing in on 3% since September 1, a level not seen for a generation. This move is attributed to renewed Middle East fighting and oil prices above $90 a barrel.

The increase in oil prices has intensified inflation risks, which are reflected in the rising benchmark bond yield. According to Reuters, if the 10-year yield remains above 3%, Japan's debt-financing costs would surge beyond the current provision of 31 trillion yen ($195 billion).

The pressure is not limited to Japan's long-dated bonds; the 30-year Japanese government bond yield has also advanced, reaching 4.06% on August 17.