Historic day for global bonds as 10-year Treasury and JGB yields hit highest in decades

• Rise in Japanese bond yields tracked higher U.S. Treasury yields, which according to UOB, had surged to near two-decade highs across the curve
• Earlier this month, Japan's benchmark borrowing costs reached highest level in three decades, after U.S. Treasury Secretary Scott Bessent signaled that he expects Tokyo and the Bank of Japan to support the falling yen.

Japanese 10,000 yen and US 100 dollar banknotes arranged for a photograph in Tokyo, Japan, on Friday, May 10, 2024. Noriko Hayashi | Bloomberg | Getty Images

Japanese 10-year government bond yield rose to a 30-year high on Thursday, following a surge in U.S. Treasury yields, while concerns about inflationary pressures were exacerbated by a weaker yen.

The benchmark 10-year JGB yield rose 8 basis points to 3.055%, the highest since August 1996. The 30-year yield rose nearly 7 bps to 4.134%. The 5-year yield rose to a record high of 2.345%, up 7 bps.

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The rise in Japanese bond yields tracked higher U.S. Treasury yields, with the 10-year surging to a 19-year high.

"The sell-off was driven by rebounding oil prices, stronger-than-expected US PMI data, and weak demand at a US$70 billion 5-year Treasury auction, which pushed 5-year yields above 5%," UOB said in a note.

Earlier this month, Japan's benchmark borrowing costs already rose to their highest level in three decades, after U.S. Treasury Secretary Scott Bessent signaled that he expects action from Tokyo and the Bank of Japan to support the falling yen.

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