Global debt markets came under renewed pressure on Thursday as Japan’s benchmark 10-year government bond yield surged to its highest level in 30 years, extending a sell-off that began in US Treasuries overnight.
As Tokyo reopened following a three-day holiday, the 10-year Japanese government bond yield jumped as much as eight basis points to 3.055%, its highest level since August 1996. The 30-year yield also climbed to around 4.125%.
The move followed the sharpest daily increase in US Treasury yields since the market turmoil of April 2025, after stronger-than-expected US business activity revived inflation concerns and a weak five-year Treasury auction intensified selling.
The global bond sell-off matters for equities because higher government yields raise borrowing costs and make bonds more competitive with shares, putting particular pressure on highly valued technology companies, property stocks and other rate-sensitive sectors.
Oil added another inflationary pressure. Brent crude remained around $103 a barrel, after settling at $103.08 on Wednesday as investors reacted to renewed tension between the US and Iran.
Wall Street had already reacted to the rise in yields, with the Dow falling 0.7%, the S&P 500 down 0.9% and the Nasdaq losing 1.1% on Wednesday.
Asian equities were mixed. Japan’s Nikkei 225 rose around 1% to 65,645, helped by strength in semiconductor and AI-linked shares, while Hong Kong fell 0.3% and Shanghai declined 0.9%. Australia’s ASX 200 dropped 0.7%, while South Korean markets were closed for the Chuseok holiday.
For investors, the key issue is no longer just whether bond yields are rising, but how far the repricing spreads across asset classes. If Japanese and US yields continue climbing together while oil remains above $100, the market faces a difficult combination of higher discount rates, higher corporate funding costs and renewed inflation pressure.
That backdrop is generally tougher for expensive growth shares, property companies, highly leveraged businesses and long-duration assets, while banks, insurers and some commodity producers may prove relatively more resilient. The clearest signal to watch now is whether the US 10-year and Japanese 10-year yields keep making new highs — because sustained moves there would increase the risk of a broader equity de-rating rather than a short-lived bond-market correction.
