Japan's 10-year government bond yield climbed to its highest since 1996, joining a deepening global selloff as the market reopened after Silver Week holidays. The yield rose 10 basis points to 3.075% on Thursday, with the five-year rate rising 9.5 basis points to 2.37%.

The moves followed an intensifying selloff in Treasuries, where robust US economic data and weak demand at a debt auction pushed yields to their highest in nearly two decades. Rising oil prices added to inflation concerns and reinforced expectations for further Federal Reserve interest-rate hikes.

Domestic pressures are also contributing. The Bank of Japan raised its benchmark rate and left the door open to further tightening, though traders were disappointed by the lack of clearer guidance. Two dissents against the rate increase and the absence of a larger 50-basis-point move fueled concern the BOJ risks falling behind on inflation, according to Katsutoshi Inadome of Sumitomo Mitsui Trust Asset Management. Fiscal concerns are adding pressure, with the government considering a new mid-term defense spending target of 3.5% of GDP, adding scrutiny over Prime Minister Sanae Takaichi's spending plans.