Japan’s benchmark bond yield hits 3% for first time since 1996

{"text":[[{"start":null,"text":"

"}],[{"start":10.64,"text":"Yields on Japan’s 10-year government bonds hit 3 per cent on Tuesday for the first time in three decades after US Treasury secretary Scott Bessent sent his clearest signal yet that Washington wants the Bank of Japan to raise interest rates more aggressively."}],[{"start":25.88,"text":"The move is part of a global sell-off in bonds, with US 10-year Treasury yields hitting their highest level since January 2025 on Monday after a renewed flare-up in conflict in the Middle East. Yields move inversely to prices."}],[{"start":40.84,"text":"Bessent met both Satsuki Katayama, Japan’s finance minister, and Kazuo Ueda, the central bank governor, at a G20 meeting in the US on Monday. He told both that Tokyo’s next step should be to raise interest rates, according to Japanese state broadcaster NHK."}],[{"start":57.32,"text":"In a subsequent interview with CNBC, Bessent said: “I have information that the market doesn’t have, and it’s my belief that the Japanese government and the BoJ will do the things that will lead to a stronger yen.”"}],[{"start":69.94,"text":"Even before Bessent’s remarks, the market had put a high likelihood on the BoJ raising interest rates by 0.25 percentage points to 1.25 per cent at its monetary policy meeting on September 18."}],[{"start":82.84,"text":"The benchmark JGB yield was last above 3 per cent in 1996."}],[{"start":null,"text":""}],[{"start":88.12,"text":"The move comes amid predictions by some economists and traders that rates above 3 per cent could cast significant doubt on Japan’s ability to control its finances."}],[{"start":97.68,"text":"A yield of more than 3 per cent on the benchmark 10-year bond could also spur Japan’s life insurers to ditch US bonds and repatriate capital to domestic markets."}],[{"start":108.28,"text":"Japan is basing its budget assumptions for the fiscal year starting next March on an interest rate of 3.8 per cent."}],[{"start":114.9,"text":"The meeting between Bessent and his Japanese counterpart, on the sidelines of a G20 finance ministers’ meeting in North Carolina, also covered the state of the yen, whose weakness the US has flagged as a potential cause of concern."}],[{"start":127.76,"text":"Japanese and US authorities jointly intervened in July and August in a record effort to support the weak yen, although more than half of the currency’s gains have since been wiped out."}],[{"start":137.92,"text":"Japan spent the equivalent of $96.4bn to boost its currency, while the US intervened with a smaller, undisclosed amount."}],[{"start":147.08,"text":"The yen was pushed back from a four-decade low of around ¥164 to the dollar by the joint interventions. But after strengthening to as much as ¥155, the currency has weakened towards ¥160."}],[{"start":161.2,"text":"Katayama told reporters on Tuesday that she had confirmed with Bessent that continued, co-ordinated action in foreign exchange markets was still needed."}],[{"start":169.8,"text":"“FX moves ought to be reflecting fundamentals, but many times they do not,” she said."}],[{"start":176.3,"text":"In an open letter to senior Democratic senator Elizabeth Warren last month, Bessent noted that Japan was a major holder of US Treasuries, as well as a critical partner and treaty ally."}],[{"start":187.64,"text":"“Disorderly yen markets can trigger forced unwinds which could destabilise global markets and ultimately raise borrowing costs for American families and businesses,” Bessent wrote."}],[{"start":203.08,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1788242205_1514.mp3"}