FX.co ★ Japan 10-Year Yield Hovers Near 18-Year High

Japan's 10-year government bond yield recently hovered around 1.96%, marking its peak since 2007. This comes in response to Bank of Japan Governor Kazuo Ueda's indication that the central bank is approaching its inflation target, suggesting a possible rate hike in the near future. The market is anticipating a potential interest rate increase from the BOJ as early as next week, with particular focus on Ueda’s remarks following the meeting to gain insight into policy directions for the following year. Sources close to Prime Minister Sanae Takaichi's administration have indicated that key government figures would likely not oppose a rate increase this month; however, there are still reservations among some senior officials regarding the timing. Concurrently, a downward revision of Japan’s Q3 GDP, revealing a more pronounced contraction, has complicated the outlook for interest rates. Additionally, concerns over fiscal stability have arisen due to Takaichi’s ambitious spending plans, which have also influenced market sentiment.