Japan’s 10-year government bond yield reached 3% on Tuesday, marking the country’s most expensive borrowing rate since September 1996. The government’s borrowing cost has risen 2,900% in less than five years, compared with just 0.1% for a 10-year loan originated in early 2022.
Yield on 10-year Japan Government Bonds, 2006-present. Source: Tradingview
Japanese government bonds (JGBs) are setting multi-decade records across much of the yield curve. Japan is currently paying 1.81% to borrow for two years, 2.26% for five years, 3.8% for 20 years and 4.18% for 30 years.
Only 40-year JGBs remain slightly below their multi-decade record, at 4.28%. That maturity reached a recent high of 4.4% in May.
Higher yields are helping Japan attract bond buyers despite growing concerns about the country’s debt costs. Tuesday’s 10-year JGB auction drew more than three bids per bond, keeping the bid-to-cover ratio in line with the annual average.
Japan’s borrowing costs reach the highest levels since the 1990s
Several JGB maturities reached multi-decade highs on Tuesday, although they were not technically all-time records. Japanese ministry archives show that JGBs offered higher yields during the 1990s.
Market data provider Barchart described the 30-year yield as the highest in history, exclaiming: “Dear God!”
Technically, however, 30-year JGBs traded a few basis points higher in May 2026. In addition, the formal data series only dates back to 1999, when investors used other maturities to construct an effective 30-year holding period.
BREAKING 🚨: JapanJapan’s 30-Year Yield just ripped above 4.18%, the highest level in history 🤯 👀 Dear God! pic.twitter.com/sW13NrSqgb
— Barchart (@Barchart) September 1, 2026
Regardless of the technical comparisons, Japanese government bond yields are far higher than the rates Japan has paid in recent years.
Japan’s debt-servicing costs are rising sharply
Japan remained largely under the radar of bond traders for years because of its high level of domestic credit ownership, foreign-exchange intervention, mandated bond purchases and strong employment. JGBs and the yen stayed relatively calm and appeared to remain under control.
That stability has changed. The Bank of Japan (BOJ) raised its policy rate to 1% in June, the highest level in 31 years. Markets now expect another increase to 1.25% this month, raising the government’s borrowing costs further.
Inflation concerns are also increasing among yen traders who had generally remained complacent. The BOJ’s July outlook projects core consumer prices rising well above its target, citing potential catalysts such as higher crude oil prices. “The consumer price index is likely to accelerate to a level clearly above 2% from the second half of fiscal 2026,” BOJ guided.
On July 31, with the yen near a 40 year low against the US dollar, the US and Japanese governments bought yen together for the first time since 1998. Scott Bessent’s US Treasury paid with euros from its Exchange Stabilization Fund. Japan, the largest foreign holder of US debt, said it would use a Federal Reserve facility to borrow dollars against its $1.1 trillion US Treasury stockpile.
Tokyo’s finance ministry said, “This joint action countered excessive volatility and disorderly movements in the Japanese yen in recent months.” Bessent hailed the “coordinated foreign exchange actions” against “disorderly yen movements.”
Despite the historic intervention, the yen failed to hold its gains and Japanese borrowing costs continued to rise. Eleven days later, the yen was weakening again against the dollar, and this week it traded near 160 per dollar.
Japan’s debt-servicing costs are expected to reach a record 36.6 trillion yen ($230 billion) next year, an increase of 17% in a single year.
