Japan’s 10-year government bond yield rose to around 2.99% on Friday, approaching its highest level in 30 years, in tandem with a climb in US Treasury yields after a weaker-than-expected US government bond buyback operation. Fresh data also showed that US producer prices accelerated last month, reinforcing expectations of a Federal Reserve interest rate increase next week.
At the same time, oil prices continued to advance as the conflict between the United States and Iran showed no sign of easing, intensifying concerns about inflationary pressures. On the domestic front, data revealed that Japanese producer prices climbed 7.6% in August, bolstering market expectations that the Bank of Japan will raise interest rates this month.
Business sentiment among large manufacturers improved markedly in the third quarter, reaching its highest level since the fourth quarter of 2021, supported by robust government policy measures. Earlier this week, BOJ board member Kazuyuki Masu signaled that the central bank intends to continue normalizing monetary policy and gradually withdraw stimulus as underlying inflation moves closer to its 2% target.