Some of the links on this site may be affiliate links. ICOBench may receive advertising commissions when users visit recommended platforms via our affiliate links, at no additional cost to you. All recommendations are based on a comprehensive review process. 
Japan’s government bond market surged on December 1 as the yield on the 2-year Japanese government bond (JGB), the most sensitive to monetary policy expectations, broke above the symbolic 1.00% level, intensifying speculation that the Bank of Japan (BoJ) is preparing for an imminent rate hike.
🇯🇵 End of Japan's decades-long era of ultra-accommodative monetary policy
2-year government bond yield climbed above 1% for the first time since 2008.
5-year yield rose to 1.345%, a level last seen in June 2008.
30-year yield briefly reached a record high of 3.395%.This… https://t.co/fWQul4eB16 pic.twitter.com/KwmUuGoK3h
— BlockFlow (@BlockFlow_News) December 2, 2025
JGB Yields Reach Highest Levels in Nearly Two Decades
The benchmark 10-year JGB yield rose 0.07 percentage points to 1.88%, reaching its highest level since July 2006, according to Trading Economics data.
The 2-year yield, often considered the clearest reflection of BoJ policy expectations, climbed above 1.00%, a level not seen since mid-2007.
The surge followed comments from BoJ Governor Kazuo Ueda, who said the central bank would “carefully weigh the merits and demerits” of a rate hike at its upcoming policy meeting. Analysts interpreted the remark as the clearest signal to date that the BoJ may raise interest rates as early as this month.
Over the past month:
- The 10-year yield has risen 0.22 percentage points
- Compared with a year earlier, it is 0.80 percentage points higher
Although Japan remains far from the all-time high of 7.59% recorded in June 1984, the recent surge marks a dramatic shift after nearly 20 years of ultra-low interest rates.
Economists see this as a historic turning point for Japan’s monetary regime.
Markets Now See 80% Probability of a December Rate Hike
Market pricing shows traders now assign an 80% probability to a rate hike at the December 19 BoJ policy meeting, sharply higher than about 60% last week.
Governor Ueda has expressed confidence that the Japanese economy will rebound from weak Q3 growth, and says the impact of U.S. tariffs appears far less severe than initially feared.
Recent discussions between Prime Minister Takashi and Governor Ueda also suggest political backing for a shift away from monetary stimulus as Japan moves toward policy “normalization.”
Rising Yields Pose Risks for Global Liquidity and Crypto Markets
Japan’s rapidly rising bond yields could have global ramifications, particularly through the unwinding of the long-standing yen carry trade—a strategy in which investors borrow low-yielding yen and invest in higher-yielding assets such as U.S. Treasuries or emerging-market bonds.
If Japanese rates rise:
- Borrowing in yen becomes more expensive
- Investors may unwind carry trade positions
- Global liquidity could tighten
- Volatility in risk assets may surge
Analysts warn that crypto assets, especially Bitcoin, altcoins, and leveraged positions, could face sudden downside pressure if yen-funded positions begin to reverse.
Previous carry-trade unwinds have triggered sharp selloffs across global markets.
Interactive Brokers noted that the 2-year yield breaking 1% is a psychological milestone signaling that markets believe Japan’s era of ultra-easy monetary policy is nearing its end.
With the next BoJ meeting scheduled for December 18–19, investors worldwide are bracing for potential shifts that could ripple across traditional and digital asset markets alike.
A confirmed rate hike , Japan’s first in years, could trigger short-term corrections in both global markets and cryptocurrencies, making caution essential for investors.
