The 10-year yield is up by 4.4 bps to 4.275% on Tuesday, marking its highest level since September 2025. As a reminder, the yield on notes and bonds moves in the opposite direction of their prices.
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A major factor driving the 10-year yield higher is the selloff in Japanese bonds. Earlier today, the yield on Japan’s 40-year bonds surpassed 4% for the first time after Japanese Prime Minister Sanae Takaichi teased tax cuts that could lead to inflation. Expectations of higher inflation tend to increase yields.
Why is the 10-Year Yield Up Today?
Furthermore, higher yields on Japanese bonds could attract capital away from foreign debt, such as U.S. Treasuries. “Yields on JGBs have reached levels that make investing in US Treasuries unattractive on a currency-hedged basis,” said Lazard Asset Management Chief Market Strategist Ronald Temple. “If JGB yields continue to rise, a rational choice by Japanese investors could be to move capital back to Japan.”
Bond traders are also digesting President Trump’s new tariffs on eight European countries. Trump’s economic policies, at times unpredictable, have led traders to question the appeal of U.S. Treasuries.