A recent and dramatic spike in Japanese bond yields is a stark reminder that the decadeslong experiment in ultralow rates is well and truly coming to an end.
Yields on Japanese 10-year government bonds have jumped 50 basis points since November to above 1.5%, hitting that level for the first time in 16 years. The bonds were yielding about 0% at the end of 2020.
“Who would have thought long-term interest rates would rise this much in about a year after the Bank of Japan ended the negative rate policy?” Hideo Kumano, executive economist at Dai-Ichi Life Research Institute, wrote in a report late last month. “I myself had thought 1% would be the ceiling for a while, so this was unexpected."
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