Japan’s 30-Year Yield Hits Record 4.235% on AI Demand

Japan’s 30-year government bond yield reached a record 4.235% on Monday, its highest level since the maturity was introduced in 1999. Bank of Japan Deputy Governor Shinichi Uchida linked the rise in long-term rates to the economic impact of artificial intelligence adoption.

In a Monday speech, Uchida described AI adoption as “a big positive demand shock” that has increased pressure on prices and economic activity. He linked the technology to stronger demand, higher equity prices and easier financial conditions.

Uchida pointed to large bond sales by AI-related companies as another factor behind higher long-term borrowing costs. Over time, higher productivity and capital investment tied to AI could affect Japan’s neutral interest rate, known as R-star. That is the interest rate consistent with stable economic growth and inflation.

The 30-year yield first moved above 4% in May. Investors are assessing Japan’s inflation outlook, monetary policy and government bond market. Uchida warned that the broader AI trade could face a correction if company profits fall short of expectations.

The BOJ raised its policy rate to 1.25% in September. Investors expect another increase before the end of the year, although BOJ officials have not confirmed whether last week’s inflation data will affect the timing.

Higher Japanese yields can raise borrowing costs globally and reduce demand for riskier assets. The increase has raised concerns about spillovers into markets including commodities and digital assets.

AI-linked cryptocurrencies traded in different directions on Monday. The Artificial Superintelligence Alliance token, FET, rose 15.09% in 24 hours to $0.2571. Venice Token gained 5.87%, NEAR Protocol rose 1.68% and Render increased 0.93%. Bittensor fell 2.99%, while Internet Computer declined 6.44%.

FET recorded about $322.43 million in 24-hour trading volume against a market value of roughly $602.08 million. No specific catalyst for the token’s gain was identified. Uchida’s remarks addressed AI’s effects on the economy, inflation, interest rates and equity markets, and did not refer to digital assets.