Japan's Bond Yield Hits 3.0%: Highest Since October 1996

The yield on Japan's benchmark 10-year government bond jumped to 3.000 percent for the first time since October 1996, according to a monitor in Tokyo's Chuo Ward.

This move comes amid growing expectations for another interest rate hike by the Bank of Japan to curb inflationary risks and persistent concern about the country's worsening fiscal health.

The bond yields have tracked gains in U.S. Treasury yields, as inflation concerns reemerged after the West Texas Intermediate crude oil futures contract topped $85 per barrel following the resumption of fighting between the United States and Iran.

U.S. Treasury Secretary Scott Bessent has reportedly expressed hopes for further interest rate hikes in Japan, while Prime Minister Sanae Takaichi's drive to ramp up spending to strengthen the economy is reflected in the estimated size of budgetary requests submitted by government departments for the next fiscal year, which stood at a record 143 trillion yen ($890 billion).

Higher bond yields mean higher debt-servicing costs for Japan, with its fiscal health being the worst among advanced economies, having outstanding debt twice the size of its economy.