What the BoJ's 29–30 October Meeting Could Mean for a 5.00% 10-Year Treasury Yield

Japan is the largest foreign creditor of the US government, according to TD Economics, and Bank of Japan rate decisions help set what Japanese investors can earn at home compared with US government debt. The central bank's next policy meeting is scheduled for 29 and 30 October 2026, according to the BoJ's website.

The US 10-year Treasury par yield was 5.00% on 23 October 2026, after readings of 5.15% on 19 October, according to the Treasury's daily yield curve. Three channels connect a change in Tokyo's rates or in Japanese government bond (JGB) yields to that market: Japanese holdings of Treasuries, the yen carry trade and US term premiums.

Japan's Treasury Holdings Set the Scale of the Link

The Treasury's Major Foreign Holders table shows Japan holding $1,068.3 billion of US Treasury securities in August 2026, out of total foreign holdings of $9,331.7 billion. The United Kingdom was next at $1,009.5 billion, followed by mainland China at $590.7 billion, Belgium at $490.5 billion and Canada at $464.6 billion.

TD Economics put Japan's holdings at roughly $1.2 trillion in a note dated 31 March 2026, while the Treasury table shows $1,068.3 billion for August 2026. The table also notes that holdings held in overseas custody accounts may not be attributed to actual owners, so country figures may not precisely reflect ownership.

Treasury publishes TIC holdings data monthly. The latest final report on foreign portfolio holdings covers the end of June 2025 and was released on 30 April 2026. A notice dated 10 June 2026 announces a mandatory survey of foreign holdings of US securities as of 30 June 2026.

Higher Japanese Yields Compete With Treasuries

The Bank of Japan's website lists its complementary deposit facility rate at 1.25% and its basic loan rate at 1.5%, both effective 24 September 2026. Its guideline for the uncollateralized overnight call rate encourages it to remain at around 1.25%. The policy meeting ran on 17 and 18 September 2026, and the statement was issued at 11:54 on 18 September, according to Securities.io.

Securities.io reports a 7-2 vote at that meeting, with Asada Toichiro and Sato Ayano dissenting, and describes the decision as covering the call rate at around 1.25%. The same report gives 16 June 2026 as the date of the previous change to the money market operations guideline, without stating its size. TD's March 2026 note gave the policy rate as 0.75%, a level it said the BoJ reached in late 2025.

TD's note said Japan's domestic 10-year JGB yield, at about 2.3%, is near multidecade highs and competes with the roughly 1.3% that a fully hedged US Treasury offers Japanese investors. The gap between those two yields in TD's figures is about 1 percentage point. The note also reported net sales of foreign securities by Japanese investors at about ¥4 trillion, or roughly $25 billion, since the start of 2026, citing Ministry of Finance data.

The Yen Carry Trade Adds a Faster Channel

TD says higher Japanese funding costs and narrower yield gaps weaken the case for yen-funded carry trades. TD also says rising Japanese yields weaken the economics of yen-funded carry trades.

TD describes these trades as highly asymmetric, meaning relatively small adverse moves can prompt rapid deleveraging rather than gradual adjustment. As an example, it cites January 2026, when the 30-year JGB yield rose nearly 30 basis points in one day and the US 10-year yield moved about 8 basis points in response.

TD warns that if the carry-trade channel comes with sharp currency moves or rising volatility, it could force yields to adjust more abruptly.

How Reduced Japanese Demand Could Lift Long-Term US Yields

TD estimates that the loss of Japanese demand could add 20 to 50 basis points to the US 10-year yield in the medium term. The estimate covers a longer horizon than the daily moves listed below.

The note also cites US deficits nearing $2 trillion annually. For recent levels, Treasury's 10-year par yields for 19 to 23 October 2026 were 5.15%, 5.12%, 5.13%, 4.96% and 5.00%, a range of about 19 basis points over the week.

The 4.96% reading on 22 October was the lowest of those five daily par yields, and the 5.15% reading on 19 October was the highest.

What the 30 October Decision Will Be Measured Against

Securities.io reports that the September statement says CPI (all items less fresh food) has been rising moderately within a range of 1.5% to 2.0%, and projects it to accelerate to a level clearly above 2 percent from the second half of fiscal 2026. The statement also says accommodative financial conditions are expected to be maintained after the change in the policy rate.

Securities.io reports that one opinion cited higher import prices as keeping upside price risks high, and another said crude oil prices could stay high. One opinion said the neutral rate may deviate upward from prior estimates, depending on developments overseas, and the Cabinet Office said the Bank may need to consider its neutral rate estimates.

Asada argued that, with CPI (all items less fresh food) recently below 2%, the economy could not necessarily be called strong. Sato argued that economic and price developments did not appear to have substantially accelerated. One opinion noted that the September hike would be the first in three months since June, and that the interval between rate hikes would be shorter than before.

The BoJ's website lists the summary of opinions from the 17 and 18 September meeting as published on 1 October, and minutes of the 30 and 31 July meeting as published on 28 September. Securities.io gives 5 November for the full minutes of the September meeting, 10 November for the summary of opinions from the October meeting and 23 December for its minutes.

The next Monetary Policy Meeting is listed for 29 and 30 October 2026, and Securities.io says it comes with an Outlook for Economic Activity and Prices report.

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