Japan bond yields rise to multi-decade highs, raising yen carry-trade concerns

Beincrypto reports Japan’s government bond yields have surged sharply in a repricing described as among the most dramatic in modern history: the 10-year yield has climbed to around 2.12% — its highest since 1999 — while the 30-year yield has reached nearly 3.5%.

Yields have risen by roughly 104 and 120 basis points, respectively, amid concern over Japan’s fiscal and monetary trajectory after the government approved a record $780 billion budget for fiscal year 2026. Commentators have pointed to emerging liquidity strains: Money Ape warned cash in circulation fell 4.9% in 2025, the first decline in 18 years, and noted the monetary base dropped below ¥600 trillion.

Analysts say the tightening places pressure on the yen carry trade and could remove a key source of global liquidity, with consequences for risk assets such as Bitcoin if unwinds accelerate. RadarHits highlighted pressure on carry positions as the 30-year yield hit record highs and some observers described the shift as a slow-building risk; others note real interest rates in Japan remain negative, which so far supports liquidity. As of early January 2026 yields remain volatile and it is uncertain whether the Bank of Japan can engineer a soft landing or whether stress will trigger wider dislocations.

Key Topics

Business, Japan, Jgb Yields, Yen Carry Trade, Bitcoin