Japan’s 10-year government bond yield is now approaching 3%, a level not seen since the mid-1990s.
That’s a remarkable change for a country that spent decades with interest rates near zero.
What catches my attention isn’t just the number itself. Japan has long been one of the world’s biggest sources of cheap capital. As domestic bond yields become more attractive, Japanese investors have less reason to look abroad for yield.
That could have consequences far beyond Japan.
Capital returning home could add pressure to foreign bond markets, including U.S. Treasuries, potentially pushing borrowing costs higher elsewhere.
After decades of ultra-cheap money, Japan is slowly becoming a source of higher yields rather than near-free capital.
That shift is worth watching.
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