Japan’s benchmark 10-year government-bond yield jumped to 3.055% Thursday, reaching its highest level since August 1996 as the global bond selloff spread deeper into Japanese markets.
The 10-year yield rose eight basis points in early trading, while the 30-year yield climbed 5.5 basis points to 4.125%. Bond yields move inversely to prices.
The move followed another sharp increase in U.S. Treasury yields and came as a weaker yen added to Japanese inflation concerns.
Japan is particularly exposed to the transition toward structurally higher borrowing costs after decades in which extremely low interest rates and large-scale central-bank purchases suppressed government financing costs.
The Bank of Japan raised its benchmark rate to 1.25% last week, its highest level in 31 years, as policymakers shifted toward a more proactive response to inflation.
Higher Japanese yields matter beyond Tokyo. Japanese institutions are major global investors, and increasingly attractive domestic yields can alter the relative appeal of overseas government bonds and other foreign assets.
Markets will watch the yen, inflation expectations and upcoming Japanese bond auctions for signs of whether the selloff is stabilizing or developing into another leg higher in borrowing costs.
