Japan bond yields hit 3% as AI boom masks US economic risks

Japan's 10-year government bond yields have risen to 3% for the first time since September 1996. This surge is driven by investor concerns regarding inflation, fiscal health, and mounting pressure on the Bank of Japan to accelerate interest rate hikes. Short-term yields have also reached significant milestones, with the two-year bond yield hitting a 31-year high as markets anticipate rate increases in the upcoming month.

In a related analysis of global market stability, Nomura reported that the boom in the artificial intelligence sector may be masking growing risks within the US economy and capital markets. The report highlights that the concentration of global savings in US-denominated assets leaves investors vulnerable to a potential correction in the technology rally. Nomura noted that US net international investment position (NIIP) liabilities have reached $21.9 trillion, representing 71% of the country's GDP, while total portfolio liabilities have climbed to $37.4 trillion.