TOKYO, May 19 (Xinhua) -- Selling pressure continued in Japan's domestic bond market on Monday, pushing government bond yields sharply higher and heightening concerns over the country's fiscal risks and financial stability.
The yield on the latest issue of 10-year Japanese government bond (JGB), the benchmark long-term interest rate in the country, briefly climbed to 2.8 pct in Tokyo trading on Monday, marking its highest level since October 1996. Yields on 30-year and 40-year JGB also surged to record highs of 4.2 percent and 4.345 percent, respectively.
Because Japan has long maintained an ultra-low interest rate environment, fluctuations in the bond market were traditionally limited. The latest rapid rise in JGB yields has therefore drawn unusual market attention and intensified concerns about the sustainability of Japan's fiscal position.
Analysts said that Japan's bond market is currently facing a combination of "external and domestic pressures," with multiple factors contributing to the sustained increase in government bond yields.
On the external front, persistent tensions in the Middle East have kept international crude oil prices elevated, fueling fears of renewed global inflationary pressure. Bond markets worldwide have come under strain, with government bond yields in both the United States and Europe moving higher and exerting upward pressure on Japanese yields as well.
On Friday, the yield on the benchmark 10-year U.S. Treasury note briefly rose to around 4.6 percent, near its highest level in more than a year. Government bond yields in several major European economies have also climbed to multi-year highs.
Domestically, concerns over Japan's fiscal outlook are seen as having an even greater impact on the bond market.
Since the administration led by Prime Minister Sanae Takaichi, which advocates aggressive fiscal spending, took office, JGB yields have maintained an upward trajectory. Before Takaichi became president of the ruling Liberal Democratic Party in October 2025, yields on 10-year and 30-year JGB stood at around 1.66 percent and 3.15 percent, respectively. Both have since risen by more than one percentage point.
Takaichi said on Monday that the government had begun studying additional fiscal measures, including the possibility of compiling a supplementary budget for fiscal 2026. She also instructed the ruling coalition to consider subsidy programs for summer electricity and gas bills. According to Reuters' Monday report, the Japanese government was examining the possibility of issuing additional special government bonds to fund the supplementary budget.
The rapid rise in JGB yields has heightened market concerns that expanded fiscal spending could further worsen Japan's already heavy debt burden.
The Organization for Economic Cooperation and Development (OECD) said in a recent report that Japan's public debt had reached approximately 206 percent of gross domestic product by 2024, the highest level among OECD member states. The report argued that Japan should rely more on measures such as raising the consumption tax to improve its fiscal condition, rather than further expanding government spending.
Analysts believe that as long as the "domestic and external pressures" facing Japan's bond market persist, upward pressure on government bond yields is unlikely to ease significantly. Takafumi Yamawaki, head of Japan rates research at J.P. Morgan Securities, said the rise in JGB yields may only moderate if stock markets decline sharply and capital flows back into bonds, or if the government clearly demonstrates a credible path toward fiscal sustainability. Enditem
京公网安备 11010802027341号