Japan's 10-Year Bond Yield Touches Highest Level Since 1996

Japan's benchmark 10-year government bond yield climbed to its highest level in nearly three decades on Tuesday, as global inflationary pressures and expectations of a Bank of Japan rate hike weighed on the market.

The yield rose 2.5 basis points to 2.945% in early trading, marking the strongest reading since September 1996. Yields move inversely to bond prices, so the rise reflects a decline in the value of the debt.

Trading in other cash bonds had not yet begun as of 0000 GMT, but benchmark 10-year JGB futures slipped 0.19 yen to 125.97 yen, signaling broad weakness across the curve.

The move comes amid a global selloff in bonds, driven by rising oil prices and stalled Middle East peace talks that have kept inflation concerns alive. At the same time, market participants have increasingly priced in a rate increase by the Bank of Japan at its next policy meeting in September.

Recent comments from central bank officials have leaned hawkish, and media reports suggest the policy board could pursue more aggressive tightening than previously anticipated. The combination of external yield pressure and domestic monetary policy expectations has pushed Japanese government bond yields to levels not seen in over 30 years.