The world's third-largest bond market crossed a line on Tuesday that it held for three decades, though the speed of the ascent is the more remarkable part.
The yields on Japanese 10-year bonds reached a level unseen since September 1996, driven by inflation, fiscal worries and near-certainty that the Bank of Japan will tighten this month, with that last expectation being actively encouraged from Washington at the G20 gathering in North Carolina.
The Japanese 10-year yield has more than tripled in two years and roughly doubled since Prime Minister Sanae Takaichi took office last October on a platform of fiscal expansion perceived by concerned investors as reckless.
Shorter maturities are at extremes too, with the Japanese 5-year at a record high and the 2-year at a peak of over three decades as well.
The immediate driver is monetary policy as the BOJ's rate stands at 1%, a level last seen 31 years ago, reached through a slow sequence of hikes. Firstly, 0.5% to 0.75% last December, and then to 1% in June.
