Markets · Issue 02
Japan’s 10-year just cleared 3%
At the end of August 2026 Japan’s 10-year yield printed above 3% for the first time since 1996. The US 10-year is 4.75%. The UK 10-year is 5.26%. The cost of money is a regime again — in the country that taught the world it might not be.
- United States
- United Kingdom
- Japan
- Japan 10-year yield, early Sep 2026
- 3.0%
- US 10-year, 31 Aug 2026 (FRED)
- 4.75%
- UK 10-year, 2 Sep 2026
- 5.26%
- Last time JGB 10s lived above 3%
- 1996
The last zero-rate civilisation just posted a three-handle
FRED’s 31 August 2026 print on the US 10-year is 4.75%. The UK 10-year on 2 September is about 5.26%. Those are loud, and they are not new. The line that should not be possible sits under them: Japan’s 10-year, the instrument that taught two generations of investors that a large advanced economy can pin the cost of money near zero, cleared 3% for the first time since 1996. Oil above $95 after Hormuz, a weak yen, and a Bank of Japan that is no longer the world’s bid for duration all rhyme. A 30-year that printed 4.18% in the same week is the longer fuse.
Interest larger than the Pentagon is a coupon. This is the price of the coupon
Pair this with Interest now costs more than the Pentagon and The $348 trillion ledger. $970 billion of US net interest is what a 4-handle 10-year does to a 99% debt-to-GDP sovereign. Japan’s public debt is larger as a share of GDP than America’s. A 3% 10-year does not bankrupt Tokyo in a week. It reprices every bank’s JGB book, every life insurer’s duration, and every ‘yen is a funding currency’ carry trade that assumed 0.5% was a law of nature. The 2010s portfolio was long duration because the Japanese taught the world that yields only fall. The 2020s portfolio has to survive a world in which they also rise, in Japan.
The long view is a cost of capital, not a week of tape
A 3% JGB is a regime change if it holds, and a headline if the BoJ caps it. Own quality cash-flow that can refinance at 5%, some gold as policy insurance, and a scepticism toward any model that needs the 2019 10-year. Do not own a 2026 ‘short Japan’ that assumes the BoJ will not blink. They have blinked before. They have not had a 3% 10-year in thirty years.
Investing lens
Horizon 3–10 years · Educational, not advice
The zero-rate civilisation is over until proven otherwise. Own refinance-able cash flow and some duration insurance. Do not build a book that only works if JGBs return to 0.5%.
Where the map points
- Quality equities and credit that can live with a 5% 10-year
- Allocated gold as policy insurance (see A thousand tonnes)
- A smaller sleeve in Japan banks/insurers that gain from a steeper curve, sized for BoJ risk
- Avoid levered duration that needs 2019 yields
What can break it
- A growth shock that rallies bonds everywhere at once
- BoJ yield-curve control, in a new costume
- 2026 prints are snapshots, not annual averages
CHART does not recommend securities, funds or trades. Figures can be revised by their publishers. Do your own research and consider regulated advice before allocating capital.
Sources
Every headline number traces to a named publisher. Contextual sources inform the essay, not the key stat.
- 01PrimaryFederal Reserve Bank of St. Louis (FRED)2026-09-01Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity (DGS10)
31 August 2026 print: 4.75%. Annual averages 2015–2024 from the same series (2015 2.14 … 2024 4.21).
- 02CorroboratedMarket prints / CNBC JP10Y2026-09-02Japan 10-year government bond yield — early September 2026
Japan 10-year ~3.01% in early September 2026, first print above 3% since 1996. UK 10-year ~5.26% the same week. 2015–2025 annuals reconstructed from OECD long-term government series. Not a ministry year-table.
- 03PrimaryCongressional Budget Office2026-03-30The Federal Budget in Fiscal Year 2025: An Infographic
FY2025: net interest $970 billion; defense $893 billion; nondefence discretionary $980 billion; mandatory $4.2 trillion; deficit $1.8 trillion (5.8% of GDP); debt held by the public 99% of GDP.
- 04CorroboratedInstitute of International Finance2026-02Global Debt Monitor
Nearly $29 trillion added in 2025; total global debt a record $348 trillion.
Keep reading
Interest now costs more than the Pentagon
In fiscal 2025 the United States paid $970 billion in net interest on the public debt. Defence cost $893 billion. The bond market is now a larger federal programme than the armed forces.
$970bn
US net interest, FY2025 (CBO)
The $348 trillion ledger
Private and public debt set a record in 2025. Sovereign debt is heading back to 100% of world GDP — earlier than the IMF thought.
$348 tn
Global debt stock, end-2025 (IIF)
A thousand tonnes a year, on purpose
Central banks bought 863 tonnes of gold in 2025. That is a ‘slow’ year. 2022–24 each cleared 1,000 tonnes. The pre-2022 average was about 470. This is the official sector rewiring the reserve stack.
863 t
Official-sector gold buying, 2025
Four hundred million barrels
On 11 March 2026 the IEA voted to release 400 million barrels from emergency stocks — three times the 2022 Ukraine actions combined, six times Katrina. The Strait of Hormuz is still not a market you can count on.
400 mb
IEA collective stock release, 11 Mar 2026