Overview
- Japan’s 10-year government bond yield rose to about 2.41%, the highest since 1999, after short- and mid-term yields set records.
- Futures pricing points to roughly a 55% chance of a 0.25-point BOJ rate increase this month, reflecting expectations for tighter policy.
- Banks, insurers, and pension funds hold about ¥390 trillion in JGBs, so a 1-point rise in yields would create tens of trillions of yen in paper losses that pressure them to sell riskier foreign assets.
- Rising domestic returns make yen-funded carry trades less attractive, so investors unwind overseas bets and bring cash home, which slows the flow of money to global markets.
- Crypto has shown the strain, with about $9.6 billion leaving Bitcoin in early 2026 and stablecoin supply near record highs as traders park cash instead of redeploying into risk.