FX.co ★ Japanese Yields Follow Treasury Yields Lower

Japan’s 10-year government bond yield retreated to around 2.83% on Thursday, pulling back from a 30-year high of 2.95% hit earlier in the week. The move mirrored declines in US Treasury yields after Washington announced steps to curb long-term borrowing costs via an expanded bond buyback program. The US Treasury Department said it would at least double the size of its liquidity-support buybacks for securities maturing in 10 to 30 years, following a sharp rise in yields that has amplified concerns about market liquidity and stability.

At the same time, speculation is intensifying that the Bank of Japan could raise interest rates as early as September, as an increasing number of policymakers advocate a stronger policy response to persistent inflationary pressures. On the economic data front, Japan’s trade deficit widened significantly in July. Imports surged to a record high, driven largely by higher crude oil purchases, while exports continued to grow solidly, underpinned by strong global demand for AI-related semiconductors.