🔴 Japanese government bond yields are BREAKING RECORDS across the curve:
The 40-year Japanese government bond yield has risen to 4.39%, the highest since this maturity was introduced in 2007.
The 30-year yield has surged to 4.15%, the highest since its debut in 1999 while the 10-year yield has risen to 2.79%, the highest level since the 1990s.
This comes as Japanese Prime Minister Sanae Takaichi reversed course on Monday, calling for a supplementary budget to fund energy subsidies in response to surging oil prices from the Middle East conflict, after weeks of denying any need for additional spending.
The planned extra budget is expected to require fresh debt issuance on top of Japan's already record 122 trillion yen budget for the current fiscal year, deepening concerns over the country's fiscal trajectory.
Super-long bond yields are continuing the surge as investors are pricing in the prospect of significantly higher bond supply.
Meanwhile, Japan's wholesale inflation surged to a 3-year high of 4.9% in April, bolstering the case for the Bank of Japan to raise rates at its June meeting, with markets currently pricing in a ~70% probability of a hike.
Nothing stops this train.
🔴Japan's bond market, the world's 3rd largest, is BREAKING:
The 30-year Japanese government bond yield has breached 4% for the first time since its debut in 1999.
The 20-year JGB yield is up to its highest since 1996.
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BREAKING: Japanese investors sold -$29.6 billion in US Treasuries, agency, and local authority debt in Q1 2026, the largest quarterly sale since Q2 2022.
This marks the first quarterly outflow since Q4 2024 and follows 11 quarters of purchases of the last 12.
Agency debt includes mortgage-backed securities (MBS) and bonds from government-sponsored entities, while local authority debt includes municipal bonds issued by US states, cities, and local governments.
This comes as rising interest rate expectations, driven by a rebound in inflation, weighed on bond prices and prompted Japanese investors to cut US bond holdings.
Japan is the largest foreign holder of US Treasuries, at $1.24 trillion, ahead of the UK, at $897 billion, and China, at $693 billion.
Japanese investors are aggressively dumping US bonds.