New 10-Year Bond Yield Tops 2.6%

2026-05-13

Domestic Bond Market

In the domestic bond market on the 13th, the yield on newly issued 10-year government bonds briefly rose to 2.6%. That marked the highest level in about 29 years, since May 1997. Bond prices fell.

Inflation and Fiscal Concerns

Bond selling intensified amid inflation fears driven by higher crude oil prices and caution over worsening public finances. A retreat in expectations for U.S. rate cuts and rising U.S. yields also helped push up domestic rates.

U.S. Yield Rise Spreads

The U.S. Consumer Price Index (CPI) for April, released by the U.S. Labor Department on the 12th, rose 3.8% from a year earlier, showing the strongest growth in three years. Concerns about renewed inflation reduced market expectations that the Federal Reserve (FRB) would cut rates this year, sending long-term U.S. yields higher. This also spread to Japan's bond market.

Stronger Caution Over Higher Oil Prices

As negotiations toward ending hostilities between the U.S. and Iran stall, Japan remains heavily dependent on the Middle East for crude oil imports, keeping inflation concerns firmly in place. The near-month June contract for U.S. crude oil futures WTI (West Texas Intermediate) topped $100 per barrel on the 12th. Even after exceeding the key 2.5% level, long-term yields kept rising, and uncertainty over the outlook for fiscal policy is also curbing bond buying.

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