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TOKYO — A sell-off in global bond markets intensified on Tuesday, with Japan’s benchmark 10-year government bond yield reaching 3% for the first time since 1996, as investors reacted to mounting concerns over inflation, tighter monetary policy and deteriorating fiscal conditions.
The rise in Japanese yields came amid a broader increase in borrowing costs across major economies. U.S. 10-year Treasury yields climbed to 4.798%, while Germany’s 10-year borrowing costs reached 3.35%. In Britain, 10-year gilt yields rose to 5.25%, their highest level since 2008.
Rising energy prices, intensified by geopolitical tensions in the Middle East, have added to inflationary pressures and strengthened expectations that major central banks may keep interest rates higher for longer. The increase in oil prices has further complicated the outlook for inflation and monetary policy.
Japan’s move toward higher yields is particularly significant because the country has historically maintained exceptionally low borrowing costs. The latest increase reflects changing expectations for monetary policy as well as concerns about the government’s fiscal position and heavy debt burden.
The sharp rise in Japanese bond yields could also have implications for global financial markets. Japanese investors are major holders of overseas bonds, and higher domestic yields could encourage them to redirect capital toward Japanese assets, potentially reducing demand for U.S. and European government debt.
Analysts said the global bond sell-off reflects a combination of factors rather than a single market trigger. Inflation concerns, increased government borrowing, expectations of further interest-rate increases and reduced demand for sovereign debt have collectively contributed to the rise in yields.
The market move comes as investors reassess the outlook for global interest rates and government finances. Higher yields increase borrowing costs for governments and businesses and can place additional pressure on economic growth, investment and financial markets.
The developments have heightened scrutiny of Japan’s fiscal position, where rising debt-servicing costs could constrain future government spending. At the same time, stronger yields are reshaping investment strategies as investors reassess the relative attractiveness of government bonds across major economies.
The latest bond-market turbulence marks a significant shift in global fixed-income markets, with investors increasingly focused on the combined impact of inflation, fiscal expansion, geopolitical risks and changing monetary-policy expectations.
