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Japan 10-yr yield tops 3%, yen carry trade unwind risk grows

Japan’s 10-year government bond yield broke above 3% this week, the highest since September 1996, as markets price a 25bp BOJ rate hike in September. US Treasury Secretary Bessent warned of forced unwinds if yen moves turn disorderly, while analysts see carry-trade unwinding risk as manageable. Japan holds over $1 trillion in US Treasuries, raising concerns about capital repatriation.

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