Japan's 10-Year Bond Yield Hits 3% for First Time Since 1996

Japan's 10-year government bond yield hit 3% for the first time since 1996, marking a significant milestone in the country's debt market. This surge is attributed to investors making decisions based on inflation and economic growth expectations rather than Bank of Japan policy.

Wee Khoon Chong, senior Asia Pacific market strategist at BNY, noted that rising yields will weigh on existing portfolios but also create more attractive entry points for fixed-income investors. JGBs are once again becoming a credible allocation option.

International investors account for about two-thirds of monthly cash JGB transactions, up from 12% in 2009. This increased activity reflects the higher bond yields globally and the reflating economy, which is experiencing a surge in corporate profits and rising wages.