Japan's benchmark 10-year bond yield reaches 3% level for first time in 30 years

Business Recorder reported that Japan's benchmark 10-year bond yield touched 3% on Tuesday, a level last seen in September 1996. The rise reflects inflation worries, fiscal strain and a shift in monetary policy after years of low interest rates. Yields have climbed to historic levels across the government bond curve, and the 10-year yield is now more than three times its level of two years ago.

Middle East tensions have added to inflation fears worldwide, and traders now regard a rate increase at the Bank of Japan's meeting this month as almost certain. The five-year yield is at a record high, while the two-year yield has reached a 31-year peak. A yen near a four-decade low has added to pressure on the central bank, which has been criticised in Japan and overseas for moving too slowly.

Japan's heavy debt, which exceeds 200% of gross domestic product, leaves it especially exposed to higher borrowing costs. Concerns have grown over planned tax cuts and Prime Minister Sanae Takaichi's investment-led growth push. Demand at the August 10-year auction was the weakest in a year, and yields in the United States, Germany and France have also reached multi-year highs amid the US-Iran conflict and elevated oil prices.