Japan 10-Year Yield Hits Fresh 17-Year High

Japan’s 10-year government bond yield rose to around 2.16% on Thursday, marking a third consecutive session of gains as hawkish signals from the Bank of Japan supported domestic yields. Board member Hajime Takata, regarded as the most hawkish member, called for further rate hikes and for guidance reflecting that the price stability target is nearly met. Governor Kazuo Ueda also reportedly said the central bank will carefully review economic data at its March and April meetings before deciding on rate adjustments, leaving the door open for a near-term hike. These developments followed the government’s nomination of two reflationist academics to the BOJ policy board, reinforcing expectations that the central bank will proceed cautiously with further tightening. The moves steepened the yield curve, with long-term yields rising at the fastest pace in a month.

Japan’s 10-year government bond yield rose to around 2.1% on Wednesday, rebounding from a six-week low following reports that Prime Minister Sanae Takaichi expressed concern over additional rate hikes in a meeting with Bank of Japan Governor Kazuo Ueda last week. Takaichi also nominated two reflationist academics to the central bank’s policy board, reinforcing expectations that the BOJ will take a cautious approach to further rate increases. Known for her pro-stimulus stance, Takaichi supports both expansionary fiscal policies and looser monetary settings, creating uncertainty around the pace of BOJ rate hikes even as speculation mounts that the central bank could resume policy normalization later this year. Japanese yields had been pressured recently amid hopes that Takaichi’s expansionary policies would stimulate growth without putting undue strain on public finances.

Japan’s 10-year government bond yield dropped to around 2.1% on Tuesday, marking a six-week low as uncertainties over US President Donald Trump’s trade policies increased demand for safe-haven debt. Over the weekend, Trump threatened to raise global tariffs from 10% to 15% following a Supreme Court ruling that struck down his reciprocal tariffs, and warned of steeper duties on countries that “play games” with existing trade agreements. Tokyo urged Washington to ensure the ruling would not harm Japanese firms and reaffirmed its commitment to the US trade deal. Japanese yields have also been pressured by optimism following Prime Minister Sanae Takaichi’s landslide election victory earlier this month, with hopes that her expansionary fiscal policies will stimulate growth without straining public finances.