New 10-Year Government Bond Yield Hits 2.8%, Highest in About 29.5 Years

2026-05-18

New 10-Year Bond Yield Hits 2.8%

In Japan's bond market on the 18th, the newly issued 10-year government bond yield, a benchmark for long-term interest rates, rose as high as 2.8% at one point. Bond prices fell, reaching their highest level in about 29 and a half years since October 1996. The yield was up 0.1% from the previous week's close.

Higher Oil Prices and Fiscal Concerns

With the outlook for the Middle East difficult to foresee, oil prices have remained elevated. Inflation concerns are intensifying at home and abroad, making investors less willing to buy bonds. In the European and U.S. markets on the 15th, long-term interest rates rose sharply, and the U.S. long-term yield reached the upper 4.5% range, its highest level in about a year. This trend carried over into Tokyo trading after the weekend.

Selling Also Hits Super-Long Bonds

In Japan, speculation that the government will compile a supplemental budget for fiscal 2026 has also heightened concerns about expansionary fiscal policy. Selling accelerated in super-long government bonds, which have longer maturities and are more sensitive to fiscal concerns, and the 30-year bond yield briefly reached 4.2%, setting a new record high. In 1996, the most actively traded benchmark issue was treated as the long-term interest rate.

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