Japan’s 10-year government bond yield climbed to around 2.78% on Friday, breaking a two-day losing streak as a rebound in oil prices—driven by renewed tensions in the Strait of Hormuz—revived concerns over inflation and the future path of interest rates.
On the data front, figures showed that Japan’s household spending fell 3.3% in June, sharply missing expectations for a 1% increase and highlighting persistent weakness in consumer demand.
In terms of monetary policy, investors are increasingly focused on the possibility of a Bank of Japan rate hike in September, after the central bank kept its current policy settings unchanged last week. Minutes from the July policy meeting indicated that several board members expect consumer inflation to accelerate markedly in the second half of the current fiscal year, as companies continue to implement broad-based price increases across a wide range of goods.