the 40-year touched 4.115%. The tricky part is that the BoJ is trying to normalize policy without choking off growth, and the latest economic data didn’t make that job easier. Japan’s economy expanded at an annualized 1.1% in the April-June quarter versus a 2.0% median forecast, with consumer spending flat and business investment down 1.2%, leaving markets guessing how far and how fast rates can rise.
Why should I care?
For markets: A 2.925% 10-year JGB can quickly show up as losses for Japan’s biggest bond holders.
Higher yields mean lower bond prices, and longer-dated bonds tend to swing more when rates move. That can translate into mark-to-market valuation hits for Japanese banks and life insurers that hold large piles of JGBs, nudging them to be more cautious about adding long-maturity exposure until rates settle. It also matters beyond Japan’s financial sector: government yields are the starting point for pricing a lot of yen borrowing, so a higher, more volatile JGB curve can feed into higher funding costs for companies issuing longer-term debt.