Japan Bond Yields Hit 30-Year High as Yen Intervention Tests US Treasury Market

Japan's 10-year government bond yield has climbed to its highest level in 30 years, driven by persistent inflation, Bank of Japan rate hikes and investor anxiety over Prime Minister Sanae Takaichi's spending plans. The BOJ raised rates last week, its second increase this year. The surge matters globally. Japan is the largest foreign holder of US Treasuries, and further selling of dollar assets to defend the yen could push US borrowing costs higher. Treasury data showed Japan reduced its Treasury holdings in May, June and July. US Treasury Secretary Scott Bessent led a historic joint intervention with Tokyo in late July after the yen hit a 40-year low against the dollar. Traders warn a rapid yen appreciation alongside rising Japanese rates could unwind carry trades, forcing investors to sell stocks and Treasuries. President Donald Trump and Takaichi are expected to meet Tuesday during the UN General Assembly in New York.