Japan's benchmark 10-year government bond yield rose to 3.035%, its highest level in almost 30 years, after a jump in US long-term rates driven by surging crude oil prices, Jiji Press reported on September 15.

The move takes the key long-term interest rate to its strongest level since September 1996, according to Japan Bond Trading Co., which quoted the yield on the newest 383rd issue of 10-year Japanese government bonds. Rising borrowing costs come as investors weigh the fiscal plans of Prime Minister Sanae Takaichi's administration against an expected tightening of monetary policy by the Bank of Japan.

Crude oil prices soared after a halt to operations at a key oil pipeline in Saudi Arabia that came under attack. Concern over faster inflation pushed the US 10-year Treasury yield above 5%, which in turn triggered selling in the Japanese bond market.

Domestic factors added to the pressure. Market participants pointed to worries about the expansionary fiscal policy of the Takaichi government and to expectations that the Bank of Japan will speed up the pace of policy interest rate increases.

The central bank is expected to raise its policy rate to 1.25% at its two-day monetary policy meeting starting on September 17.