Japanese government bond yields surge to multi-decade highs amid rising U.S. Treasury yields and yen weakness

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.

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.