⚠️Japan's bond yields just crossed a historic THRESHOLD: Japan's 10-year government bond yield surged to 3% for the first time since 1996. This yield has now doubled from ~1.5% over the last 12 months, underscoring how fast the shift has been. Notably, foreign investors now account for ~66% of monthly JGB trading volume, up from just 12% in 2009, as the Bank of Japan’s role in setting bond prices diminishes. The shift reflects the BOJ’s retreat from years of negative rates and heavy bond buying, giving private investors a greater role in determining JGB yields based on market forces. Markets now imply a 92% probability of a BOJ rate hike by September, with an October increase already more than fully priced in. Meanwhile, Japan's Finance Ministry is budgeting a record ¥36.6 trillion, or ~$230 billion, for debt servicing next fiscal year, up 17% from this year as higher bond yields push up the government's funding costs. Investors, not the Bank of Japan, are now the ones setting the price of its debt.