FX.co ★ Japan 10-Year Yield Falls Sharply

Japan’s 10-year government bond yield fell roughly 10 basis points to 2.77% on Friday, retreating from near three-decade highs after Finance Minister Satsuki Katayama signaled that the government would encourage domestic pension funds to increase their exposure to Japanese financial assets.

Her comments came after Japanese government bond (JGB) yields had risen in recent sessions on growing concerns about the country’s fiscal expansion plans and persistent inflationary pressures. The government recently released a draft roadmap outlining more than ¥370 trillion in combined public and private investment by fiscal 2040, targeting 17 strategic sectors designated as priorities under the Takaichi administration.

Bond yields were also pushed lower as oil prices declined, following reports that the United States and Iran intend to continue peace talks despite a recent flare-up in hostilities. The pullback in oil prices eased some pressure on Japan’s import-dependent economy, which relies heavily on crude supplies from the Middle East.