Japan's 10-year government bond yield touched 3% on Tuesday for the first time since 1996. This milestone represents a return to normality for a debt market where benchmark borrowing costs had languished near zero for years, and it comes as part of a deepening global sovereign debt sell-off.
Other maturities are also experiencing significant spikes. The five-year rate has hit a record high, and the two-year yield has reached a 31-year peak. Inflation and fiscal concerns continue to weigh on the market, even following intervention and verbal support from officials.
A Tuesday auction of 10-year government bonds saw demand in line with the 12-month average, as high yields attracted investors positioning for an interest rate hike from the central bank. Simultaneously, US Treasury Secretary Scott Bessent used a G20 finance meeting to press Tokyo for faster rate hikes.