Japan's 10-year bond yield hits 30-year high as US selloff ripples across Asia

Japan’s benchmark 10-year government bond yield jumped to a 30-year high of 3.115% on Friday, after a US selloff, Reuters reported.

The yield had climbed to around 3.08% on Thursday, its highest since August 1996, after strong US private-sector activity data reinforced expectations of further Federal Reserve rate hikes, according to tradingeconomics. A weak auction of five-year Treasury notes deepened the global bond selloff, while uncertainty around US-Iran negotiations kept oil prices elevated.

The surge added pressure across the economy. S&P Global data showed Japanese manufacturing growth slowed to a seven-month low in September. The Bank of Japan raised interest rates last week in a widely anticipated move, with two officials dissenting, and Governor Kazuo Ueda said the central bank remains committed to raising rates.

Japan said US President Donald Trump voiced concern over the weak yen in a summit with Prime Minister Sanae Takaichi, Reuters reported. Tokyo conducted rate checks on Friday, a move viewed as a precursor to currency intervention, and economy minister Minoru Kiuchi said the Abenomics-style reflation era of monetary easing plus agile fiscal spending is over.

Benchmark JGB yields have surged two percentage points in under two years to a 30-year high above 3%, Reuters reported, and with hedging costs, US Treasuries now offer Japanese investors less attractive returns than domestic bonds, according to Deutsche Bank’s Shoki Omori. Japanese investors bought 4.8 trillion yen of sovereign debt in August, the largest net purchase in three months, per Barclays’ analysis of Japan Securities Dealers Association data.