Japan's 10-year new government bond yield has broken through a 30-year high, and the rising yields are beginning to encourage funds to return home, reversing the previously stable flow of funds into global bond markets. The 3% benchmark is significant not only for the cost of funding in Japan but also because it reverses the flow of funds that has made Japan the largest holder of U.S. Treasuries and one of the most stable buyers in the global government bond market. Japanese investors had net sold 3 trillion yen ($18.7 billion) of overseas bonds by August 22, marking the largest outflow from the start of a year since the bond price crash in 2022. A survey by JPMorgan Asset Management found that the proportion of plans to increase holdings of domestic bonds was the highest since the survey began in 2008. In Sydney, London, and Singapore, the waning demand from Japanese investors for foreign bonds is being felt, with a shift from "buying more" to "maintaining the status quo" observed in Australia.
Rising JGB yields signal higher rates, directly positive for the yield itself.
