3%: Japan pays the highest interest on its debt in 30 years

WHAT HAPPENED

The interest on the 10-year Japanese bond reached 3%, its highest level since 1996. It then slightly decreased to 2.97%. In simple terms: Japan now pays more to borrow money.

WHY IT MATTERS

Inflation remains high and the market expects the Japanese central bank to raise rates. Additionally, the government's debt is equivalent to 2.3–2.5 times what the country produces in a year. This increases their payments and may reduce money for other expenses.

AND FOR YOUR PORTFOLIO

Japan could offer better interest rates to its own pension funds and insurance companies, which currently have a lot of money in foreign bonds. If they repatriate some of that money, other markets could receive less investment and raise their rates, loans, and mortgages.