FX.co ★ Japan 10-Year Yield Surges as US and China Lower Tariffs

Japan's 10-year government bond yield surged by nearly 10 basis points, reaching approximately 1.45% on Monday. This marked the highest level in over five weeks, buoyed by an improved global risk appetite following a significant agreement between the U.S. and China to considerably cut tariffs. The positive outcome stemmed from fruitful trade discussions over the weekend in Switzerland, which alleviated geopolitical tensions and subsequently reduced the demand for safe-haven assets like Japanese government bonds. As part of the preliminary accord, U.S. tariffs on Chinese products will be lowered from 145% to 30%, while China's tariffs on American imports will decrease from 125% to 10%. This development is regarded as a crucial step toward de-escalating the protracted trade conflict. Investors kept a keen eye on the progression of U.S.-Japan trade discussions, with Tokyo targeting to finalize a deal by June. Domestically, Japan reported a current account surplus of JPY 3.45 trillion in March, a decline from the record JPY 4.06 trillion in February, yet still indicative of strong external economic standing.