FX.co ★ Japan 10Y Yield Hits Over 1-Month High

Japan’s 10-year government bond yield rose to about 2.86% on Thursday, its highest level in more than a month, as markets weighed the chances of a Bank of Japan interest rate hike in September. The move followed a growing chorus of policymakers calling for a stronger policy response to persistent inflationary pressures.

At the same time, producer prices in Japan continued to climb at an elevated pace in July, keeping cost pressures on businesses high. Producer inflation increased 7.2% year-on-year, easing only marginally from 7.3% in June, which had marked the fastest pace since March 2023.

The BOJ has recently attributed the rise in producer prices in part to higher oil costs following the conflict in the Middle East, as well as to increases in nonferrous metal and machinery prices driven by stronger global demand associated with the artificial intelligence boom. Tight labor market conditions have also sustained upward pressure on wages as firms compete to attract and retain workers.