Japan's 10-year bond yield hit an 18-year high on Wednesday, as reports on the scale of government spending next year raised financial concerns. Japan's 10-year bond yield rose 3 basis points to 1.980%, a record high since June 2007. Katsutoshi Inadome, senior strategist at Sumitomo Mitsui Trust Asset Management, said, “Reports on government spending have raised concerns about deteriorating fiscal health.” Reuters quoted sources as reporting that Japan's total expenditure on the 2026 draft budget is likely to exceed 120 trillion yen, setting a historical record, exceeding 115 trillion yen this fiscal year. Concerns about increased spending prompted investors to sell longer-term Japanese bonds, while shorter-term bonds were sold in anticipation of the Bank of Japan's interest rate hike. The 10-year bond yield, which is in the middle of the curve, will respond to both topics. Keisuke Tsuruta, a senior fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities, said that the pressure on 10-year bonds intensified in the afternoon. Earlier, the Bank of Japan's debt purchase operation showed that the results of the debt purchase operation, which lasted about 10 years, were weak.

Japan's 10-year bond yield hit an 18-year high on Wednesday, as reports on the scale of government spending next year raised financial concerns. Japan's 10-year bond yield rose 3 basis points to 1.980%, a record high since June 2007. Katsutoshi Inadome, senior strategist at Sumitomo Mitsui Trust Asset Management, said, “Reports on government spending have raised concerns about deteriorating fiscal health.” Reuters quoted sources as reporting that Japan's total expenditure on the 2026 draft budget is likely to exceed 120 trillion yen, setting a historical record, exceeding 115 trillion yen this fiscal year. Concerns about increased spending prompted investors to sell longer-term Japanese bonds, while shorter-term bonds were sold in anticipation of the Bank of Japan's interest rate hike. The 10-year bond yield, which is in the middle of the curve, will respond to both topics. Keisuke Tsuruta, a senior fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities, said that the pressure on 10-year bonds intensified in the afternoon. Earlier, the Bank of Japan's debt purchase operation showed that the results of the debt purchase operation, which lasted about 10 years, were weak.