FX.co ★ Japan 10-Year Yield Climbs on Hawkish BOJ Signals

The yield on Japan’s 10-year government bond climbed to approximately 1.54% on Monday, nearing its highest point in 16 years. This rise came after Bank of Japan (BOJ) Deputy Governor Shinichi Uchida indicated that the central bank would persist with interest rate hikes if the economic and inflationary conditions remain favorable. In a related development, BOJ Governor Kazuo Ueda revealed that the central bank has been gradually reducing its long-term Japanese Government Bond (JGB) holdings, while emphasizing that an immediate sale was not practical at this time. In its recent meeting, the BOJ kept its policy rate unchanged at 0.5%, choosing to evaluate global economic risks, including the potential repercussions of increased US tariffs on Japan's economy. On the economic side, newly released data highlighted a contraction in Japan’s private sector activity for the first time in five months. The manufacturing sector continued its nine-month decline, while the services sector also showed a downturn.