Japan’s 10-year government bond yield fell to around 2.75% on Thursday, its lowest level since late July, amid a broad-based global rally in both equities and bonds. At the same time, declining oil prices helped ease inflation concerns. These moves followed Democratic gains in the US midterm elections, which reduced political uncertainty and lowered the perceived risk that President Trump might resume military strikes against Iran.
Domestically, minutes from the Bank of Japan’s September meeting reinforced expectations of additional interest rate hikes. One policy board member suggested the central bank could quicken the pace of monetary tightening as it evaluates the impact of developments in the Middle East, stronger AI-related demand, and foreign exchange fluctuations. The BOJ raised its policy rate in September to 1.25%—a 31-year high—before leaving it unchanged in October, while signaling that underlying inflation had reached its 2% target.
