New 10-Year JGB Yield Temporarily Rises to 2.810%, Highest in About 30 Years

2026-07-03

Fears Over Delayed BOJ Response

In Japan's domestic bond market on the 3rd, the yield on the newly issued 10-year government bond, a benchmark for long-term interest rates, rose as high as 2.810% at one point. That was the highest level since October 1996, or about 30 years ago, and bond prices fell.

Selling spread on expectations that the Bank of Japan was falling behind in its policy response to high prices. With the switch to the new issue taking effect on the 3rd, the yield briefly rose 0.015 percentage point from the previous day. In 1996, the yield on the benchmark issue with heavy trading volume was treated as the long-term interest rate.

Uncertainty Over Fiscal Management

In a draft of the Basic Policy on Economic and Fiscal Management and Reform, or the Honebuto policy guidelines, compiled by the government on June 30, the BOJ was asked to 'conduct appropriate monetary policy management in line with economic, price and financial conditions.' In the market, expectations grew that BOJ policy would become more susceptible to government intentions.

The omission of the phrase 'fiscal consolidation,' which had been included the previous year, also prompted concern that fiscal discipline could worsen against the backdrop of Sanae Takaichi's expansionary fiscal policy. Investors grew more cautious amid uncertainty over the outlook for monetary and fiscal policy.

The 10-year bond auction conducted by the Ministry of Finance on the 2nd ended on a 'weak' note, and government bond yields rose across a wide range of maturities, led by longer-dated bonds.

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