Japan's 10-year borrowing cost reached 3% on Tuesday. This was the highest rate since September 1996. The government's borrowing cost increased 2,900% in less than five years. A 10-year loan cost the sovereign 0.1% in early 2022. The two-year Japanese government bond yield reached 1.81%. The five-year yield reached 2.26%. The 20-year yield reached 3.8%. The 30-year yield reached 4.18%. The 40-year yield reached 4.28%, just below its recent record of 4.4% in May. Tuesday's 10-year bond auction attracted more than three bids per bond. The bidding rate was in line with the annual average. The multi-decade records were not technically all-time highs. Japanese ministry archives show higher yields in the 1990s. Barchart called the 30-year yield the highest in history and exclaimed, "Dear God!" However, 30-year Japanese government bonds traded a couple of basis points higher in May 2026. The formal history for that maturity goes back only to 1999. The Bank of Japan raised its policy rate to 1% in June, the highest level in 31 years. Markets expect the policy rate to rise to 1.25% this month. The Bank of Japan's July outlook projected core consumer prices to rise sharply above its target. The bank said consumer prices were likely to accelerate to a level clearly above 2% from the second half of fiscal 2026. On July 31, the US and Japanese governments bought yen together for the first time since 1998. The US Treasury paid with euros from its Exchange Stabilization Fund. Japan said it would tap a Federal Reserve facility to borrow dollars against its $1.1 trillion US Treasury stockpile. Tokyo's finance ministry said the action countered excessive volatility and disorderly movements in the yen. Scott Bessent called the intervention coordinated foreign exchange action against disorderly yen movements. The yen did not hold its level after the intervention. Japanese borrowing costs continued to rise. Eleven days later, the yen weakened again against the dollar. This week, the yen traded near 160 per dollar. Debt servicing is set to cost the Japanese government a record 36.6 trillion yen ($230 billion) next year. The cost is up 17% in one year.
Japan's 10-Year Borrowing Cost Hits 30-Year High at 3%
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Summary
Japan's 10-year borrowing cost hit 3% on Tuesday, the highest since 1996, amid global CFT measures tightening financial flows. The rate jumped 2,900% from 0.1% in early 2022, with the 30-year yield at 4.18%. The Bank of Japan raised its policy rate to 1% in June, the highest in 31 years. Debt servicing is expected to cost 36.6 trillion yen next year, up 17%. As MiCA approaches, regulatory scrutiny on financial markets is intensifying.
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