Japan's 10-year bond yield climbs to 30-year peak as US Treasuries sell off

Japan's benchmark 10-year government bond yield rose to its highest level in three decades early on Thursday, tracking a sharp overnight selloff in US Treasuries and mounting concerns over inflation as the yen weakened.

The 10-year Japanese government bond (JGB) yield climbed 8 basis points to 3.055%, a level last seen in August 1996. Bond yields and prices move in opposite directions.

Longer-dated paper also came under pressure, with the 30-year yield rising 5.5 basis points to 4.125%.

Katsutoshi Inadome, a senior strategist at Sumitomo Mitsui Trust Asset Management, said Japanese bond yields were being pushed higher as inflation worries intensified on the back of a softer yen. A weaker yen raises the cost of imports, feeding through into domestic prices.

The move in Japan followed a surge in US Treasury yields overnight — their steepest daily increase since last year's Liberation Day market rout. The jump came after a stronger-than-expected purchasing managers' report revived inflation fears, while an auction of five-year notes drew weak demand.

The dollar rallied to its highest level in nearly two months on Wednesday as investors grew more confident that the Federal Reserve could raise rates in the near term.

Trading in other JGB maturities had not yet taken place as of 0035 GMT. Ten-year JGB futures fell by as much as 0.64 point, pointing to further selling pressure in the cash market.