Japan 10-year government bond yield rises to highest since 2008

Japan’s 10-year government bond yield climbed to its highest level since 2008 on Tuesday amid concerns over fiscal spending ahead of an upper house election this month.The 10-year rate rose 2.5 basis points to 1.595%. Japan’s 20-year bond yield hit its highest since 2000 on Monday.

Investors are focused on risks to the nation’s budget as the July 20 upper house election approaches, with the ruling party proposing cash handouts and the opposition planning to lower taxes. Concerns are growing after several local Japanese media polls said that Japan’s ruling bloc may struggle to win a majority.
Borrowing costs are marching higher again despite the move by Japan’s Ministry of Finance to cut back on issuance of super-long bonds. Some major life insurers are also shunning super-long bonds, leaving a gap in demand as the nation’s central bank gradually pares back its debt purchases.Long-term government debt is also falling globally amid worries that governments around the world are spending more than they can afford. Yields on 30-year German bunds are approaching their highest levels in 14 years, and bond markets in the US, UK, and France are facing similar selling pressures.