FX.co ★ Japan 10Y Yield Tracks US Yields Lower

Japan’s 10-year government bond yield slipped to around 3.03% on Friday, a two-week low, following a decline in US Treasury yields. The move came after strong investor demand at the latest US 30-year bond auction, despite the recent selloff in longer-dated US debt.

On the domestic front, data showed that Japan’s personal spending fell for the ninth consecutive month in August, as persistent inflation continued to dampen consumer demand.

In terms of monetary policy, Bank of Japan board member Ayano Sato—who had opposed the central bank’s September rate increase—stated this week that she now supports a gradual path of rate hikes implemented in several stages, bolstering expectations of further policy tightening.

Meanwhile, Prime Minister Sanae Takaichi continued to advance expansionary fiscal policies despite concerns over the weak yen and elevated bond yields. She pledged to reduce the consumption tax on food, while stressing that the measures would be funded without issuing additional government bonds.