Japan’s government bond market came under heavy selling pressure on Thursday, sending the benchmark 10-year JGB yield up 8 basis points to 3.055%—the highest level since August 1996. The selloff was broad: the 30-year yield rose almost 7 basis points to 4.134%, while the 5-year yield reached a record 2.345%. As bond prices fell, yields climbed, reflecting reduced demand for fixed-rate Japanese government debt amid a weaker yen and rising inflation concerns.
The move occurred against the backdrop of the Bank of Japan’s sixth rate hike in the current tightening cycle. On September 18, the BOJ raised its policy interest rate to 1.25%, the highest level in 31 years. The decision followed pressure from U.S. Treasury Secretary Scott Bessent, who had held private discussions with Japanese officials since May 2026 and argued that Japan’s Abenomics-era reflation policies were no longer effective. Bessent also made the case publicly at the August G20 meeting that Japan needed tighter monetary policy to address imbalances created by the weak yen.
Bank of Japan Governor Kazuo Ueda warned that larger interest rate increases remain possible, although opposition from two board members suggests that aggressive acceleration is not guaranteed. The macro risk for cryptocurrencies is tied to the yen carry trade. If the yen strengthens further, investors who borrowed in low-yield yen and invested in higher-yielding or riskier assets may unwind positions, creating selling pressure on Bitcoin and other risky assets, similar to August 2024.
