Japan's 10-Year Bond Yield Hits Three-Decade High Amid Inflation Worries
Japan's benchmark 10-year government bond yield has reached its highest level in nearly three decades, driven by inflation worries and speculation about a near-term interest-rate increase from the Bank of Japan. The 10-year JGB yield added 1.5 basis points to 2.935% as of 0415 GMT on Tuesday, having earlier touched 2.945%, a high not seen since September 1996.
The rise in yields was tempered by a solid auction of 5-year JGBs, which saw the highest level of demand since June 2025. The higher yield on offer attracted buyers, causing the 5-year yield to reverse an early rise and decline 1 bp to 2.15%, after having started the day by rising 2 bps to a record 2.18%.
Other cash bond tenors had not traded since the auction result, but the longer-dated bonds' yields continue to be more responsive to inflationary concerns. The 20-year and 30-year JGB yields rose 2.5 bps to 2.935% and 4 bps to 4.115%, respectively.
DBS analysts now expect the BOJ to raise the key rate in September, accelerating the pace of tightening to one quarter-point move every three to four months, from about twice a year currently.