FX.co ★ Japan 10-Year Yield Jumps After BOJ Decision

On Friday, Japan's 10-year government bond yield climbed above 1.63%, inching closer to the 17-year peak. This movement followed the Bank of Japan's decision to maintain its policy rate at 0.5% for the fifth straight meeting, a widely anticipated move. While the central bank acknowledged moderate economic recovery, it pointed out certain vulnerabilities and expressed concern about potential risks stemming from global trade strategies. Additionally, the Bank of Japan reached a unanimous decision to commence the sale of its holdings in Exchange-Traded Funds (ETFs) and Japanese Real Estate Investment Trusts (J-REITs). In parallel, newly released figures indicated a slowdown in Japan's core inflation, which rose to 2.7% in August, marking the third consecutive month of decline and reaching its lowest level since November 2024. Japanese bond yields also reflected the upward trend in US Treasury yields after the Federal Reserve implemented a quarter-point interest rate cut on Wednesday and signaled two additional cuts within the year, but anticipated only one in 2026, contrary to expectations of several reductions next year.