BREAKING: 🇯🇵 Japan's 2-year yield climbs to 1.315%, marking its highest level in nearly three decades.

The 2-year yield is at multi-decade highs. The 10-year is above 2.3%. The 30-year is sitting at 3.55%.

For context Japan kept interest rates near zero for 30 years. An entire generation of Japanese investors never knew what a normal rate environment felt like.

Here is why this matters beyond Japan.

Japanese institutions are the largest foreign holders of US treasuries and European bonds in the world. For 30 years they bought foreign bonds because domestic yields paid almost nothing. Now Japanese bonds actually pay. That changes the math.

Why earn 4.2% on a US treasury with currency risk when a Japanese bond now pays 2.3% at home with zero currency risk.

If Japanese money starts coming home even partially it pushes yields higher in the US Europe and Australia. That is tighter financial conditions for the entire world without a single central bank doing anything.

The BOJ is not even done hiking. One board member already voted for a rate hike two meetings in a row. The governor said more hikes are possible.