The yield on Japan’s 10-year government bonds reached 3% on Tuesday, its highest level since September 1996. The government’s borrowing cost has surged 2,900% in less than five years, rising from 0.1% in early 2022 to 3% today. The Bank of Japan raised its policy rate to 1% in June, the highest in 31 years, with markets now expecting a further hike to 1.25%. Debt servicing costs are projected to hit a record 36.6 trillion yen ($230 billion) next year, up 17% in one year. The yen, near a 40-year low against the dollar, prompted a coordinated US-Japan intervention in July, which failed to halt the rise in borrowing costs.
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