Global Bond Market Shifts: JGB Yield 17-Year High & Fed Rate Cut Expectations

The 2-year Japanese Government Bond (JGB) yield hit a 17-year high of 1.00% [1], indicating rising expectations of Bank of Japan (BOJ) monetary policy tightening. This shift has global implications, as higher JGB yields may trigger capital outflows from Japan to higher-yielding assets [4]. Concurrently, Societe Generale projects two Federal Reserve rate cuts in 2026 [2], influencing U.S. Treasury yield movements—10-year yields fluctuated around 4% [3]. Sector performance on November 30 reflected these dynamics: Energy (+1.13%) led gains [0], while Financials remained flat due to yield curve flattening concerns from Fed cut expectations [0].

Cross-domain connections include: (1) JGB yield rise potentially weakening the yen (attracting foreign capital), though USD/JPY temporarily fell amid BOJ speech speculation [1]; (2) Fed rate cut expectations contrasting with BOJ tightening, creating mixed sentiment in global bonds; (3) Energy sector strength aligning with commodity price stability amid policy uncertainty [0].

1. Global bond volatility from aggressive BOJ policy shifts [1]
2. Fed policy reversal if economic data improves, leading to Treasury yield spikes [2]
3. Financial sector pressure from yield curve flattening [0]

1. Energy sector outperformance [0]
2. Equity market resilience (Dow +0.49%, S&P +0.39% on Nov 28) [0]

Critical data points:

• 2-year JGB yield
  : 1.00% (17-year high) [1]
• 10-year Treasury yield
  : ~4% [3]
• Energy sector
  : +1.13% [0]
• Financials
  : Flat [0]
• Societe Generale forecast
  : Two Fed rate cuts in 2026 [2]