The specter of inflation lingers on! The 20-year Japanese government bond yield hit a new high since 1997, causing ripples in the global bond market again.

Due to the continued impact of high energy prices on inflationary pressures, the yield on Japan's 20-year government bonds has surpassed the January high and reached its highest level since 1997. Data shows that the yield rose by 5 basis points to 3.495%, exceeding the previous high of 3.46% set on January 20. The 10-year and 30-year government bond yields in Japan also rose by 5 basis points to 2.59% and 3.86%, respectively. As the U.S. and Iran have rejected each other's proposals to end the conflict, the prospect of resolving the dispute in the short term looks bleak, and oil prices remain high, increasing upward pressure on Japan's government bond yields. At the same time, the acceleration of inflation in the U.S. has led to an increase in U.S. Treasury yields, with traders increasing their bets on future rate hikes by the Federal Reserve; while U.K. long-term government bonds have fallen due to political risks, leading to negative spillover effects on Japanese government bonds. BNY Mellon Asia-Pacific market strategist Wee Khoon Chong said, "The upward trend in Japanese government bond yields is expected to continue due to rising supply pressures from the expected deficit, a weak yen, and high commodity prices. This is likely to further intensify inflationary pressures in the future." In January of this year, due to concerns about Prime Minister Naoto Kan's fiscal policy, Japanese government bonds were heavily sold off, impacting U.S. government bonds as well. The 20-year government bonds, which have relatively poor liquidity and are more prone to volatility, played a key role in this round of market movements, amplifying overall market volatility. This event caught the attention of U.S. Treasury Secretary Janet Yellen, highlighting the dangers of cross-market risk contagion. Despite multiple interventions in the foreign exchange market by Japanese authorities, the yen has weakened against the U.S. dollar once again in the background of ongoing fundamental pressures and geopolitical tensions. While Japanese officials have consistently refused to give a positive response to whether they will intervene in the market again, insiders revealed that Japan conducted interventions on April 30, and analysis of the central bank's accounts indicated that intervention on that day and during the Golden Week holiday period may have amounted to as much as 10 trillion yen (approximately $634 billion). Strategist Mark Cranfield said, "The yield on Japanese government bonds continued to rise on Wednesday, adding fuel to the fire that has already accumulated in the G10 bond market. Fixed income investors are getting anxious before facing the double challenge of two consecutive 30-year government bond auctions in the next 24 hours. Later today, the U.S. will conduct a 30-year government bond auction, following weak demand in the recent 10-year U.S. bond sale just ended on Tuesday; then on Thursday, it will be Japan's turn to issue 30-year government bonds." The continuous depreciation of the yen is intensifying inflation risks and dragging down sovereign bonds, putting more pressure on the Bank of Japan to consider raising interest rates after maintaining its policy last month. Japanese Finance Minister Kaori Kato stated that her team is closely coordinating on exchange rate policies with Treasury Secretary Yellen, but she refused to comment on discussions regarding the Bank of Japan. Yellen agreed with her concerns about excessive exchange rate fluctuations and stated that her team will maintain close communication with the Japanese Ministry of Finance.