Japan Bond Yields Near Historic 3% High Amid Inflation Fears

Japan's benchmark bond yield is nearing 3% for the first time since the mid-1990s, a milestone that highlights growing inflation and fiscal concerns in the country.

The 10-year Japanese government bond yield has more than tripled in two years and hit a high of 2.945% on Tuesday, its highest level since September 1996.

Experts say this surge reflects rising wages and inflation, as well as concerns about heavy bond issuance and spending by the government.

Shoki Omori, Deutsche Bank's chief fixed income strategist for Japan, believes yields above 3% are a form of market discipline on future spending. 'This is normalisation with a warning label, not a crisis,' he said.

The rise in JGB yields has also put pressure on the yen, which has been languishing near a four-decade low.