Japan’s 10-year bond yield hits 3% as AI selloff rattles Nikkei

Government bond yields rose across Asian markets on Tuesday, with Japan’s benchmark 10-year yield hitting the 3% mark for the first time in 30 years amid inflation worries and mounting fiscal strains.

This surge in borrowing costs continues to weigh heavily on Japanese equities, particularly technology and artificial intelligence-related stocks. It follows a volatile Monday session, in which the Nikkei share average closed virtually flat amid a mix of tech-sector anxiety and macroeconomic headwinds.

These equity gains remain capped by geopolitical risks in the Middle East and rising domestic inflation fears, especially as market consensus builds for an imminent Bank of Japan interest rate hike this September.

Analysts predict a high probability of a Bank of Japan rate hike

Bond yields moved higher in tandem with those of other Asian and global economies on Tuesday morning. For instance, South Korea’s 10-year government yield rose 0.06 percentage points, exceeding 4.37%. Meanwhile, Australia’s benchmark yield scaled a five-week high above 5.1%, alongside slight upward ticks in New Zealand and Singaporean 10-year debt. The 10-year U.S. Treasury yield had also hit a peak of 4.76% overnight.

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