Japan's 30-year yield hits record 4.223% as Bitcoin carry trade faces risk

Japan's 30-year bond yield climbed to a record 4.223% on Friday. The yield reached its highest level since Tokyo first sold the maturity in 1999. Japan's 10-year yield reached 3.055% on Thursday. That was its highest level since August 1996. The Bank of Japan raised rates to 1.25% on September 18. The rate was the highest since 1995. The central bank's board voted 7-2. The central bank signaled that further hikes remain possible in its statement. Government ministries requested ¥143.1 trillion for fiscal 2027, Reuters reported. Debt servicing accounts for ¥36.64 trillion. The Finance Ministry raised its assumed borrowing rate to 3.8% from 3%. The US 10-year Treasury yield broke 5% on September 15 during a global bond sell-off. The Federal Reserve then lifted its target range to between 3.75% and 4%. The yen slid toward 158 per dollar after the Bank of Japan's decision. Katsutoshi Inadome of Sumitomo Mitsui Trust Asset Management said Japanese bond yields face upward pressure because inflation concerns grew on a weaker yen. Higher safe returns could draw capital away from crypto. Investors borrow cheap yen to buy higher-yielding assets abroad. A sharp yen rally could make those loans costlier. That move could force investors to sell assets. Bitcoin and Ethereum fell roughly 20% during the 2024 yen shock as positions unwound. Bitcoin traded near $84,033 and fell 0.5% in 24 hours, according to BeInCrypto data. The gap between US and Japanese rates keeps the carry trade open. A sudden reversal in USD/JPY would suggest that carry positions are closing. Bitcoin could feel the effect quickly.