Japan’s 10-year government bond yield slipped below 3.1% on Friday, easing back from 30-year highs and mirroring a decline in US Treasury yields, as mounting concerns over France’s fiscal and political outlook lifted demand for safe-haven assets. Even so, Japanese yields were underpinned by firm economic data: Tokyo’s core consumer inflation accelerated to 2.7% in September, surpassing the Bank of Japan’s 2% target for the first time in nine months.
At the same time, a summary of opinions from the BOJ’s September meeting delivered fewer hawkish signals than many investors had anticipated. The document showed that policymakers have shifted their emphasis toward preventing inflation from significantly overshooting the 2% goal, implying that another rate hike is still possible this year, but offering little clarity on the likely timing.
Japanese government bonds also continued to face headwinds from the authorities’ expansive spending agenda and Japan’s worsening fiscal position, which together have added to concerns about the country’s long‑term debt sustainability.
