Japan Borrowing Costs Hit 30-Year High as Yen Crashes Near 40-Year Lows on Debt Fears

Japan's benchmark 10-year government bond yield rose to 2.830% intraday on Monday, the highest level since October 1996, after Prime Minister Sanae Takaichi's cabinet dropped references to "fiscal consolidation" from its draft "Honebuto" fiscal guidelines and set additional spending at 10 trillion yen ($61.8 billion) annually starting fiscal 2027 12. The 20-year yield climbed to 3.800%, its highest since August 1996, and the 30-year reached 4.075% 1. The yen fell to the low ¥162 range per dollar, down 0.58% on the day and near 40-year lows, extending a 2026 decline of 3.6% 13. Brookings senior fellow Robin Brooks attributed the pressure to Japan's debt burden, which he estimated at 240% of GDP, arguing the Bank of Japan's suppression of bond yields masks underlying debt-crisis risk, while SMBC Trust Bank and BofA Securities separately projected the yen could weaken toward ¥158-¥170 by year end absent faster BOJ tightening 13.