FX.co ★ Japan 10-Year Yield Falls for Second Day

The yield on Japan's 10-year government bond dipped to approximately 2.26% on Thursday, marking the second day of decline as market participants evaluated the fiscal trajectory of the nation. This occurred as the Bank of Japan commenced its two-day policy meeting. Earlier in the week, the yield had escalated to levels not seen in 27 years following an announcement from Prime Minister Sanae Takaichi. The announcement involved calling a snap election and promising more relaxed fiscal measures, such as a proposal to abolish the 8% sales tax on food items. However, yields have moderated since Finance Minister Satsuki Katayama urged market participants to remain calm. The Bank of Japan is anticipated to keep its policy rate steady at 0.75% on Friday, following a rate increase in December. Regarding economic data, Japan's exports experienced a rise for the fourth consecutive month in December, reaching unprecedented levels driven by consistent demand from China, notwithstanding lingering diplomatic tensions. Notably, annual exports grew in 2025, despite a decrease in shipments to the United States—the first such drop since the pandemic—amidst challenging trade policies.