Japan's benchmark bond yield rises to 3% for first time in 30 years

Japan's benchmark 10-year government bond yield has reached 3% for the first time in 30 years, driven by concerns about inflation, fiscal health, and pressure on the Bank of Japan to increase interest rates more aggressively. This rise in yields, which have more than tripled over two years, signals investor doubts about Prime Minister Sanae Takaichi's ability to balance fiscal responsibility with investments in areas like semiconductors and AI.

The spike in yields is also a reflection of the yen's weakness, near a four-decade low, and the central bank's need to accelerate rate hikes. Japan's heavy debt burden makes it particularly vulnerable to rising borrowing costs. Despite the bond market's initial demand, yields are expected to remain elevated around this 3% threshold.