Japanese government bond yields have jumped to levels unseen since 1997, with the 10‑year JGB reaching 2.73% and the 30‑year hitting 4%. Investors now see higher returns at home, prompting speculation that cash held abroad in U.S. Treasuries could move back into JGBs.

The rise follows the Bank of Japan’s shift from decades of ultra‑low rates to a 0.75% policy rate in December, signalling an end to aggressive monetary easing. Analysts project the 10‑year yield could climb to around 3% later this year as inflation pressures and fiscal spending under Prime Minister Sanae Takaichi drive demand for domestic debt.

Asset managers such as BlueBay and Ruffer have already funneled significant inflows into Japanese sovereign funds, with March receipts topping $700 million. These moves suggest a growing appetite for yen‑denominated assets amid expectations that the BoJ will hike rates to 1% at its June meeting.

For investors, the shift means higher domestic yields but also more volatile JGB prices. Japanese firms and the Treasury must manage the impact of a potential capital outflow reversal, while market watchers track how fiscal policy and inflation will shape the bond market’s trajectory.