Why it matters
The Bank of Japan raised its policy rate to 1.25 percent this morning and the yen fell. The more consequential number is the one on this chart. Japan's 30-year government bond closed at 4.047 percent on 17 September. Across the entire life of the tenor — 6,626 trading days since it was introduced on 2 September 1999 — the 30-year has closed at or above 4 percent on exactly 25 days, and every one of them falls after 18 May 2026. The all-time high, 4.131 percent, is seventeen days old.
For a generation Japan's long bond was the world's cheapest duration: the funding leg of the largest carry trade in finance, and the benchmark against which every other sovereign long bond looked dear. It is no longer cheap, and the Bank that set its price is withdrawing from the market on a published schedule — monthly purchases falling to about ¥2.1 trillion by the first quarter of 2027 and holdings down roughly 17 percent by the end of March.
One detail cuts against the alarm. The 30-year sits 105 basis points above the 10-year; at the end of negative rates in March 2024 the gap was 103. It is not that the slope never moved — it reached 158bp a year ago and averaged 122bp across the period. It is that it came back. Whatever is happening to Japanese yields, a term-premium blow-out is not visible in today's slope.
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Editorial scenario analysis only. Not investment, actuarial, or geopolitical advice.
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