FX.co ★ Japan 10-Year Yield Climbs Toward 30-Year High

Japan’s 10-year government bond yield moved toward 2.8% on Friday, nearing its highest level since October 1996, after a weak 10-year JGB auction this week amplified concerns about rising fiscal spending and increased government borrowing. The bond market has been under sustained selling pressure since the government announced an expansive long-term economic strategy that entails large-scale spending commitments and calls on the Bank of Japan to align monetary policy with its growth objectives. Under the plan, Japan intends to mobilize more than ¥370 trillion ($2.29 trillion) in combined public and private investment through fiscal 2040 to strengthen key strategic industries. Investors worry this could necessitate greater debt issuance, while the Bank of Japan may remain hesitant to raise interest rates despite building inflationary pressures.