Japanese Bond Yields Are Now Making Some Noise
The JGB story is something I knew was brewing in the background, but it seems like the market and I have put it to the side until today. The Japanese 10-year just crossed 3% for the first time since 1996.
Here is why this is tricky and vulnerable for the market. Japan's central bankers are trying to raise rates, and it seems like they are succeeding. So imagine you are a Japanese bank or pension fund holding a lot of foreign debt. Suddenly your own domestic bonds give you an attractive yield. What do you do? You pull money out of foreign assets, foreign bonds, foreign equities, and bring it home. To do that, you buy Japanese yen.
That creates an unwind effect in global markets. Money flows out of global assets and into yen and Japanese bonds. That could ruffle some feathers, especially with the US bond market already getting crushed and US yields moving higher.
Now the whole Japanese curve is exploding higher at once.
read the full article here.
— Alan
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1September 1, 2026 1.2K 2
