Recent surges in the Japan 10-year JGB yield to 3.04%—its highest level since September 1996—reflect global bond market repricing, with the U.S. 10-year Treasury yield exceeding 5% amid elevated energy prices and inflation concerns. Domestic factors include fiscal expansion under the Takaichi administration, including proposed consumption tax cuts without identified funding sources, which have heightened worries over debt sustainability. The Bank of Japan is widely expected to raise its policy rate to 1.25% at its mid-September meeting, accelerating normalization as underlying inflation approaches or exceeds the 2% target. These developments have compressed the distribution around higher yield outcomes by year-end, though the short remaining horizon leaves room for volatility from upcoming central bank decisions and geopolitical energy shocks.