Japan’s 10-year bond yields surged to 1.59% on Wednesday—levels not seen since 2008—as markets reeled from a new U.S. trade deal and political turmoil surrounding Prime Minister Shigeru Ishiba.
Chart: Japan’s 10-Year Bond Yields Hit Highest Levels Since July 2008
What Sparked The Panic?
The catalyst was a combination of events. President Donald Trump reset tariffs on Japanese exports. The baseline tariff on goods from Japan will now be 15%, while tariffs on autos fall from 25% to 15%.
In exchange, Japan has committed to investing $550 billion in the U.S. and opening its markets to key American exports, including agricultural and industrial goods.
While equity markets initially cheered the news — Japan’s Nikkei index rallied 3.5% — a bond auction told a very different story.
Demand for a 40-year Japanese government bond offering was the weakest since 2011, triggering a selloff across the country’s yield curve.
Speculation was already swirling that …