Japanese government bonds fell sharply in early Tokyo trading as a global bond selloff accelerated. The 10-year JGB yield jumped 7.5 basis points to 2.775%, having earlier touched 2.800% — its highest level since October 1996. Rising energy prices and the absence of a U.S.-Iran peace deal fueled investor concerns across markets.

Analysts see little immediate relief for bond markets. "There appear to be few catalysts to contain the rise in yields in the near term," said Tomonobu Yamashita, Japan strategist at BofA Securities. Supply-demand imbalances are also pushing JGB yields higher, he noted in a research report.

The Japanese government's potential fiscal moves are adding to market anxiety. Media reports suggest Tokyo is considering a first supplementary budget for fiscal year 2026, which could further strain bond markets already facing heavy selling pressure.