JGB yields climb before BOJ meeting

Japanese government bond yields climbed on October 28, 2026, as investors reduced exposure to safe-haven assets and prepared for the upcoming Bank of Japan policy meeting. The benchmark 10-year yield reached 2.805%, extending its recent move higher. The rise in yields coincided with a rebound in AI-related equities, which helped draw funds away from government bonds and into riskier assets.

The meeting of the Bank of Japan, scheduled for October 29–30, has become a focal point for fixed income markets. Participants are looking for guidance on the future path of interest rates and any signals about how policymakers will respond to persistent inflation and fiscal concerns. The shift in yields reflects these positioning moves rather than any announced change in policy.

The upward move in yields was more pronounced at the longer end of the curve. The 20-year Japanese government bond yield rose to 3.635%, while the 30-year yield increased to 3.875%. These moves outpaced the gain in the 10-year tenor and underscored investor sensitivity to long-term inflation and fiscal dynamics.

Rising long-maturity yields indicate that investors are demanding higher compensation to hold bonds with extended duration. The shifts across the curve took place against a backdrop of a broader global bond selloff over the past month, linked to ongoing inflation pressures, higher energy prices and concerns about rising government borrowing.

The current adjustment in Japan’s bond market follows a change in monetary policy earlier in the year. In September, the Bank of Japan lifted its policy rate to a 31-year high of 1.25%. For the near term, markets widely expect the central bank to leave rates unchanged at the October 29–30 meeting, even as they price in a possible 25-basis-point increase to 1.5% in December.

The policy debate is occurring in an environment of firm inflation. The Bank of Japan’s trend inflation index rose 3.2% year over year in September, accelerating from 2.6% in August. This pickup in underlying price pressures is an important backdrop for both rate expectations and the recent moves in bond yields.

Beyond monetary policy and inflation, fiscal factors are weighing on sentiment in the Japanese government bond market. Uncertainty over next fiscal year’s budget and the associated Japanese government bond issuance plan is weighing on the market.

These domestic considerations intersect with international trends, as global bond markets have also faced selling in recent weeks. For Japan, the combination of higher expected policy rates, rising trend inflation, and questions around future issuance has contributed to the latest rise in yields across the maturity spectrum.