Japan Inflation Bond Selloff Signals Growing Market Dislocations

A selloff in Japan’s inflation-linked notes has propelled their yields above zero for the first time in over four years, reflecting the growing turmoil sparked by President Donald Trump’s tariffs.

The yield on 10-year inflation-indexed notes jumped to 0.107% on Tuesday, the highest since July 2020, after reaching a low of minus 0.311% just a week ago. The move followed an abrupt slide in 30-year government bonds on Monday amid dwindling liquidity.

A rise in so-called real yields is often regarded as a signal that growth is picking up, and it could also boost the appeal of the securities. ...