FX.co ★ Japan 10-Year Yield Steady Amid Weak Trade Data

On Wednesday, Japan's 10-year government bond yield steadied at approximately 1.59%, halting a seven-day increase as investors processed trade data that fell short of expectations. In July, exports experienced a 2.6% year-on-year decline, the steepest drop in over four years, primarily due to extensive U.S. tariffs impacting global demand. Imports also decreased by 7.5%, marking the fourth decline within the year, though outperforming forecasts of a 10.4% decrease. In contrast, core machinery orders—considered a leading indicator for capital spending over the forthcoming six to nine months—unexpectedly rose in June after two months of decline. Regarding policy, market opinion remains divided on the timing and extent of potential Bank of Japan interest rate hikes, amidst mixed messages from officials. Nonetheless, Governor Kazuo Ueda continues to emphasize a cautious approach, highlighting that "underlying inflation" remains below the BOJ’s 2% target.