Japan's Bond Yields Surge to Three-Decade High Amid Inflation and Central Bank Pressures

Japan's 10-year government bond yield jumped to a three-decade high on August 17, tracking a global trend of rising debt yields due to inflation pressures and central bank interest rate hikes. The benchmark 10-year Japanese government bond (JGB) yield climbed five basis points to 2.925 per cent, its highest level since September 1996.

The yield has risen for six consecutive sessions, marking the longest winning streak in more than a year. This upward trend is causing concern, as Keisuke Tsuruta, a senior bond strategist at Mitsubishi UFJ Morgan Stanley Securities, noted that 'a bearish outlook on government bonds is spreading globally, and the upward trend in yields is intensifying.'

The two-year yield, sensitive to Bank of Japan policy rates, added 3.5 basis points to 1.685 per cent, its highest since May 1995. The five-year yield rose two basis points to 2.155 per cent, set for a record close.

Data released on August 17 showed the Japanese economy expanded at an annualised 1.1 per cent in the April-June quarter, below the median forecast of 2.0 per cent annualised growth.