Japan’s Bond Market Experiences Record High Surge Amid BOJ Policy Uncertainty

Long-term Japanese government bond yields have soared to multi-decade highs, reflecting market pressure against the Bank of Japan’s slow exit from ultra-loose monetary policy. As a result of its efforts to cool down an economy fueled by sustained inflation above the 2% target for three years running, the BOJ has started raising short-term interest rates and cutting back on bond purchases. However, the pace is insufficient, leading to an increase in yields as investors seek higher returns elsewhere. 30-year bonds reached their highest point since the early 1990s, with 20-year yields also reaching a significant level not seen in over two decades.