Japan's 10-Year Government Bond Yield Hits 3% for the First Time This Century

BlockBeats News, September 1st. The yield on Japan's 10-year government bond touched 3% for the first time this century, marking an important milestone for a bond market that has seen its benchmark borrowing cost hover near zero for years and is now gradually returning to normal. On Tuesday, the yield briefly rose 6 basis points to 3%, hitting the highest level since 1996. In the same period last year, the yield was only half of what it is now, underscoring the speed of the change and its ripple effects on the Japanese economy and the global financial markets.

Since the Bank of Japan ended the world's last negative interest rate policy in 2024, the dynamics of the government bond market in Japan have undergone significant changes. While the prices used to be largely dictated by the Bank of Japan in the past, they are now more determined by domestic and foreign investors. These investors make buying and selling decisions based on inflation, economic growth prospects, and the risk and return profile of Japanese government bonds relative to other assets, as opposed to the Bank of Japan's policies.