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Interest Rates and the Yield Curve
Japanese 10-year government bond yield
100hotat an extreme
2.50 percentage points above its 10-year average | Data for Oct 2026
Hot and cold describe position, not good or bad: warm does not mean a fall is coming, and an extreme reading does not mean a quick reversal. We describe history only, with no buy or sell advice.
What it is
Japan 10-yr yield: what is measured, and why it matters
Japan’s rates sat near zero for many years. When this yield rises, money borrowed in yen and invested abroad may flow back to Japan, affecting markets worldwide.
Where it stands now
Position over time
Data: Ministry of Finance, Japan (Public Data License, Version 1.0). Positions: our calculation.
coldcoolneutralwarmhotHatched = earlier periods that were also hot
Short sample: positions start only in 2006 (less than 30 years), so conclusions should be more cautious.
When it was here before
Earlier hot periods (1), plus the current one
US stocks after it began, cumulative1 yr2 yr3 yr
May 2006–Jun 200938-month period, hot in 34 of those months · 2008 Financial crisis and 2009 Market bottom1 yr+17.1%2 yr+8.8%3 yr−30.0%
Oct 2021–now61-month period, hot throughout · 2022 Inflation shockStill under way
For each period, the changes 1, 2 and 3 years after it began are cumulative and measured from its first month; “What happened next” is measured from every hot month, so the two give different numbers. The events named beside each period are major events of that time, not necessarily related to the readings here.
What happened nextSample too small to draw conclusions (past hot months: 34; market episodes: 1).
Has hot or cold lined up with later returns?
Some link in the past (not a guide to the future)
2006–2021: average yearly change in US stocks over the next 5 years
Hottest 20%
+3.2%a year
All months
+10.1%a year
Coldest 20%
+11.8%a year
In this period, the hotter the month, the lower the average over the next 5 years. The months overlap, so there are really only a few market episodes. This is a tendency, not a rule, and not a forecast.
Rising Japanese rates make borrowing yen to invest costlier, so money flows back to Japan
This issue: Japan 10-yr yield at 100 (hot), USD/JPY at 94 (hot) — both above normal, not in line with the common explanation (this is an inverse link).
●○○Not visible in our dataAgreement −0.06 · in step in 10 of 16 5-year periods
In most periods the two moved the way the common explanation says, but their highs and lows do not line up over the whole history, so overall no relationship is visible.
Values
Values over time
Unit: %. Data: Ministry of Finance, Japan (Public Data License, Version 1.0).
Data and sources
Where the data come from and how they are calculated
Source
Ministry of Finance, Japan (Public Data License, Version 1.0)
Frequency
Monthly
Positions start
May 2006 (short sample)
Method
Difference: this month − the 10-year average (percentage points); position = the percentile of this difference within its own history