The long end of global debt is breaking records again. On Friday, 25 September, the 10-year JGB yield held near 3.07% - the highest since August 1996 - while the 30-year sat near 4.15% after touching a record 4.22% this month. The 5-year JGB last week printed a record 2.345%. This is no longer a Japanese story: the market is repricing the entire long end.
Fig. 1. JGB yield curve, 25 September 2026. Source: Trading Economics.
There are two drivers. Domestically, the Bank of Japan raised its policy rate to 1.25% in September - a 31-year high - on a split vote. Governor Kazuo Ueda said tightening will continue; former board member Makoto Sakurai expects hikes roughly every quarter and 2% by around June 2027. Add the Takaichi government's fiscal expansion: the 2026 budget assumed a 3% long-term rate (Reuters). Externally, Japan is being dragged by the US market - and that is the main story.
Fig. 2. US 10-year Treasury yield, February-September 2026. Source: US Treasury.
What is behind it:
Fig. 1. JGB yield curve, 25 September 2026. Source: Trading Economics.
There are two drivers. Domestically, the Bank of Japan raised its policy rate to 1.25% in September - a 31-year high - on a split vote. Governor Kazuo Ueda said tightening will continue; former board member Makoto Sakurai expects hikes roughly every quarter and 2% by around June 2027. Add the Takaichi government's fiscal expansion: the 2026 budget assumed a 3% long-term rate (Reuters). Externally, Japan is being dragged by the US market - and that is the main story.
Fig. 2. US 10-year Treasury yield, February-September 2026. Source: US Treasury.
America's record run
The US 10-year note sits near 5.17% on Friday (closing 5.18% on 24 September, per the US Treasury), the highest since 2007; the 30-year is at 5.46%, the highest since 2004. According to Jefferies, the 10-year yield has risen for seven consecutive months through September, the longest run since 1970. This is no longer about one auction: on 16 September the Fed hiked rates to 3.75-4.00%, its first move since July 2023 and a unanimous one, while its latest projections allow for another hike this year. Markets price about a 67% chance of an October move; Goldman Sachs now expects an October hike, BofA forecasts three this year, and Ed Yardeni has cut his S&P 500 target from 8,400 to 7,900.What is behind it:
- Oil: Brent near $103-106 on the US-Iran war, with US inflation at 3.4%;
- Weak auction demand and fresh stimulus add to the deficit;
- In Japan, a weak yen, US pressure and the unwind of the carry trade push yields up.
⚠ IMPORTANT
A seven-month run is a condition of the market, not a signal. Historically such streaks have ended, and in 2023 a 5% print was followed by a fast rally. This time there has been no rebound, the Fed is hiking into a resilient economy, and the key question is whether the 10-year holds 5%. If it does, mortgages (7.17%), equities and the US budget will all feel it.