FX.co ★ Japan 10-Year Yield Climbs After Strong PPI Data

Japan’s 10-year government bond yield climbed to around 2.69% on Wednesday, rebounding after a decline in the previous session, as wholesale inflation accelerated at its fastest pace in three years amid surging energy costs. Producer prices rose 6.1% in May from a year earlier, following an upwardly revised 5.3% increase in April and beating market expectations of a 5.5% gain.

The stronger-than-expected figures have strengthened expectations that the Bank of Japan will raise interest rates next week, as policymakers confront mounting inflationary pressures driven by the conflict in the Middle East and the sharp depreciation of the yen. Investors are also closely monitoring remarks from BOJ Governor Kazuo Ueda, with markets increasingly pricing in another rate hike in September and the potential for a third move in December.