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Japan’s 10-year loan costs increased to a 16-year-old high on Thursday, while Tokyo joined a global sale of bonds aroused by Germany’s decision to spend more on defense.
The yield of the 10-year Japanese 10-year government increased 0.06 percentage points to 1.5 percent, its highest level since 2009. JGB has increased almost 0.4 percentage points since the beginning of 2025.
Germany on Wednesday had its largest increase in borrowing costs to 28 years after its bonds were sold after a historic agreement between political parties to spend hundreds of billions of euros on protection and infrastructure.
The increase in German bond yields comes amid the increase in yields in other countries, including the United Kingdom, in the back of the government plans to increase fiscal costs.
Traders in Asia said that the mass was forcibly directed, and that it was difficult to identify who was behind the sale, especially as the banks and the main institutions tend to be JGB buyers in March before the end of the Japanese financial year.
“It’s a similar story all over the world – a little climbing from Germany,” said Mitul Kotecha, a macro strategist at Barclays.
A “shift of views to Japan” after stronger economic growth than expected and higher inflation has raised market expectations for more clumsy politics from the Bank of Japan, he added.
Boj has increased interest rates twice in the past year, as he tries to normalize monetary policy after years of low ultra rates.
Thursday’s growth follows steady increase in JGB yields since the beginning of 2025 and comes while Japanese inflation continues to exceed the 2 per cent Central Bank target.
The uncertainties that shook around the view of the interest rate of Japan and the JGB market were emphasized in a speech Wednesday by the Deputy Governor of the Bank of Japan, Shinichi Uchida.
In a speech that affected the current state of the global economy, Uchida showed increased geopolitical tension as one of the factors that can “affect both economic activity and prices in the US, such as new administration policies”.
Some traders have started betting that the paint will raise interest rates at his next meeting later in March. However, most economists continue to predict another growth will be in July.
You were consistent through Tokyo’s breakfast on Thursday, hanging on about 149.2 ¥ against the US dollar. Japanese reserves increased during the morning, with the wide standard of Topix climbing 1.2 percent.
The shares of the two largest manufacturers of Japan’s defense, Mitsubishi Heavy and Kawasaki Heavy, increased by 10 percent and 9.8 percent respectively, in expectations that Japan will further increase its military spending.
