FX.co ★ Japan 10-Year Yield Rises on Trade Tensions

The yield on Japan's 10-year government bond rose to approximately 1.5% on Wednesday, reaching its highest point in five weeks. This increase coincides with mounting tension in the US-Japan trade discussions, particularly concerning Tokyo's protection of its rice sector. This development follows US President Donald Trump's decision to impose a 25% tariff on Japanese goods, starting August 1, without any adjustments or postponements to the established duties targeting 14 countries. Japanese Prime Minister Shigeru Ishiba described the tariff action as "truly regrettable," while affirming Japan's dedication to continue negotiations with Washington to achieve a mutually beneficial trade agreement. Additionally, market concerns were amplified by Bank of Japan board member Junko Koeda's caution regarding potential secondary inflation effects caused by recent increases in food prices, including rice. At the same time, speculation that Japanese lawmakers might introduce extra fiscal stimulus measures prior to the July 20 upper house elections further intensified pressure on long-term bond markets.