Japan's 10-Year Yield Hits 3% for First Time Since 1996, Reviving Carry Trade Unwind Fears

Japan's 10-year yield hit 3% for the first time since 1996. For 30 years, Japan served as the world's free-money spigot, with investors borrowing yen at near-zero rates to buy U.S. Treasuries and U.S. tech, a trade that only works while Japanese yields stay near zero.
At 3%, Japanese capital has a reason to come home, and Treasury Secretary Bessent is reportedly pushing the Bank of Japan to hike further, which could accelerate the shift.
The concern is that when the yen carry trade unwinds, the selling hits the most crowded longs, U.S. mega-cap tech, as it did in 2024, when the Nasdaq fell sharply within days.