On May 13, Japan's 20-year government bond yield reached its highest level since 1997, driven by rising energy prices that have intensified inflation pressures. According to Jin10, the yield increased by 5 basis points to 3.495%, surpassing the previous peak of 3.46% recorded on January 20. The yields on 10-year and 30-year bonds also rose by at least 5 basis points, reaching 2.6% and 3.86%, respectively.
In January, concerns over Japanese Prime Minister Satuki Katayama's fiscal policies led to a significant sell-off in Japanese government bonds, which extended to the U.S. Treasury market. The 20-year Japanese bond, known for its relatively low liquidity and high volatility, played a crucial role in exacerbating market fluctuations during this downturn.
This development has caught the attention of U.S. Treasury Secretary Bessent, highlighting the risks of cross-market contagion.