Overview
- Japanese government bond yields have surged to levels last seen in the 1990s, with long maturities near 4% and the 10-year at multi-decade highs.
- A government source told Reuters that Japan will issue new debt to fund a supplementary budget aimed at easing household energy costs linked to the Iran war oil shock.
- Higher returns at home are already pulling capital back, with March posting a record inflow into Japanese sovereign bond funds.
- Weaker demand has shown up in U.S. debt sales, including a 30-year Treasury auction that cleared at a 5% yield for the first time since 2007.
- Japan’s investors hold about $1 trillion in Treasuries, so sustained repatriation and added JGB supply could lift global borrowing costs and complicate central bank plans.