Ten-Year Japanese Government Bond Yield Soars to Record 1.6% since 2005
Rise in 10-year Japanese Government Bond Yield Following U.S.-Japan Tariff Agreement
The yield on Japan's 10-year government bond (JGB) has experienced a significant increase, reaching 1.6% in July 2025, the highest level since 2008. This surge was triggered by the U.S.-Japan tariff agreement, which brought about a decrease in trade uncertainties and signaled a potential easing of yield controls by the Bank of Japan (BoJ).
On July 23, 2025, the yield on the newest 10-year JGB issue hit 1.6%, up from 1.5% the previous day, following U.S. President Trump's public announcement of the tariff deal. The agreement lowered tariff uncertainty, diminishing the bonds' safe-haven appeal and encouraging speculation that the BoJ may find it easier to raise interest rates now that trade uncertainties are reduced.
This rise in JGB yields is part of a broader trend of increasing long-term yields in Japan as the BoJ gradually exits its ultra-accommodative monetary policy and begins raising its policy rates. From -0.10% in March 2024 to 0.50% by June 2025, the BoJ has been gradually increasing its policy rates.
The 10-year yield increased from about 0.80% in September 2024 to roughly 1.60% by July 2025, reflecting both domestic monetary shifts and international trade developments influencing investor behavior. Prior to this surge, JGB yields had been on a decades-long downtrend but started rising again after 2019 due to changing interest rate and inflation expectations.
The selling in the JGB market is a response to the perceived easing of tariff-related uncertainties. Investors appeared to be relieved that the tariff rate was lowered from the 25% initially notified by Trump, with the final rate set at 15%. Selling picked up in the JGB market, speculating that the BoJ may find it easier to raise interest rates. The safe-haven appeal of government bonds decreased due to this relief over the tariff rate reduction.
It is important to note that bond yields move inversely to prices. This means that as the price of bonds decreases, their yield increases, and vice versa. The tariff negotiations between the U.S. and Japan have been a source of uncertainty for the JGB market, and the resolution of these negotiations has led to a shift in market conditions.
In conclusion, the U.S.-Japan tariff agreement acted as a catalyst for a significant jump in the 10-year JGB yield by reducing trade uncertainty and signaling a possible easing of yield controls by the BoJ, amid broader shifts in monetary policy and market conditions. The selling in the JGB market is a response to these changes, with investors speculating that the BoJ may raise interest rates in the near future.
The rise in the 10-year JGB yield can be attributed to the U.S.-Japan tariff agreement, with investors in the media industry analyzing this increase as a potential easing of yield controls by the Bank of Japan (BoJ), signaling a possible shift in business strategy within the finance industry. This surge in yields, along with the BoJ's gradual exit from its ultra-accommodative monetary policy, has caught the attention of investors, as they speculate about future investing opportunities in the business sector.
