Japan's benchmark 10-year government bond yields reached 0.960% on Wednesday, marking their highest level since May 2013, as indicated by trading data from the Tokyo bond market. This increase in yields signifies a decline in prices for these long-term bonds.

The surge in interest rates is occurring while the Bank of Japan (BOJ) maintains its commitment to an ultra-loose monetary policy, even as major central banks across the globe tighten rates in response to inflation concerns. Investors are divesting from Japanese government bonds, resulting in the upward trajectory of yields, driven by anticipations of future policy adjustments by the BOJ.

Despite the increasing long-term yields, the BOJ has retained its key short-term rate at -0.1% and has aimed to keep the 10-year yield at approximately zero as part of its yield curve control policy. Nevertheless, turbulence in the bond market has frequently pushed the 10-year yield above the central bank's intended target in recent months.

The BOJ has undertaken unlimited bond purchases to sustain interest rates at their target levels, but this approach has encountered challenges in light of the prevailing global macroeconomic conditions. With inflation on the rise worldwide, the divergence between the BOJ's policy and that of other central banks is testing the limits of yield curve control.

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