Japan Rattles US Treasuries as 30-Year Yield Hits 19-Year High

Forecast Trend Report by Period

Japan’s long-term yield rises to 2.93%, the highest in 30 years

Higher domestic yields may draw Japanese institutional money home

Rising Japanese yields are shaking the US Treasury market. Japan’s long-term government bond yield has climbed to its highest level in 30 years, stoking concern that Japanese institutional investors may shift funds out of US Treasuries and into domestic bonds. At the same time, deteriorating US fiscal conditions and a surge in corporate bond issuance tied to artificial intelligence investment have helped drive ultra-long Treasury yields into the 5.3% range, the highest in 19 years.

In the US Treasury market on Aug. 17, the 30-year yield briefly rose to 5.31%, its highest level since June 2007. The 20-year yield also climbed into the 5.3% range at one point, the highest since October 2023. The benchmark 10-year yield rose to 4.72%, posting its highest close since July 31.

One of the market’s biggest concerns is the possibility of repatriation by Japanese investors. Japan’s long-term yield briefly jumped to 2.93% on Aug. 17, the highest level in 30 years. That has made domestic bonds more attractive for Japanese institutional investors, which had previously bought overseas assets such as US Treasuries to escape ultra-low yields at home.