US Treasury Secretary Scott Bessent and Federal Reserve Chair Kevin Warsh attend a gathering of finance ministers and central bank governors of Group of 20 member nations held in Asheville, North Carolina, on Aug. 31, 2026. (Reuters/Yonhap)
The rout in government bond prices that began in the US is spreading to Japan and other major economies, with rising yields pushing interest costs for governments and other borrowers to their highest levels in decades.In Tokyo, the yield on Japan’s benchmark 10-year bond neared 3.03% on Wednesday before closing at 3.018%, just one day after breaching 3% for the first time since 1996.The yield on the five-year Japanese government bond also rose 4 basis points (0.04 percentage points) to an all-time high of 2.295%.The rise in bond yields was fueled by calls from Hajime Takata, a hawkish member of the Bank of Japan’s Policy Board, for more nimble hikes of the central bank’s policy rate.Reuters reported that some analysts expect the yield on the 10-year Japanese government bond to climb to 3.2% next month. That would be double its level when Sanae Takaichi became prime minister last October.Analysts say the sharp rise in government bond yields in Japan, where interest rates had remained low for decades, signals that the global economy is entering an era of high interest rates.The yield on the 10-year US Treasury note also surged to 4.81% on Tuesday, its highest level in nearly three years. Predictions that the yield could reach 5% are further buffeting markets.The yield on the 30-year US Treasury bond, a key benchmark for long-term interest rates, recently peaked above 5.3%, its highest level since 2007.At the same time, yields on the 30-year British government bond and the 10-year German government bond also hit 28-year and 15-year highs, respectively.One factor behind the bond sell-off that is driving yields higher is the surge in oil prices following renewed hostilities between the US and Iran. As inflation fears resurface, investors are unloading bonds in fear of lower real returns.Another factor pushing yields up is the higher returns governments are offering on newly issued bonds to attract buyers. Further pressure is being added by heavy corporate bond issuance by major tech firms in the US seeking to finance investment in artificial intelligence.By Jung E-gil, senior staff writerPlease direct questions or comments to [english@hani.co.kr]
