Japan’s long-term bond yields are surging, triggering alarm bells in global capital markets and potentially impacting the U.S. financial system. As of last week, 40-year Japanese government bonds hit a record yield of 3.689%, before easing to 3.318% by Wednesday, representing a significant jump compared to January levels. The 30-year yield rose over 60 basis points to 2.914%, and the 20-year bond saw an increase of more than 50 basis points, pushing borrowing costs across the curve to historically high levels. This has led to a significant decrease in demand for these ultra-long bonds, with Reuters reporting Wednesday’s auction seeing one of the weakest appetites since July 2023.