FX.co ★ Japan 10-Year Yield Hits 2008 Peak

Japan's 10-year government bond yield approached 1.85%, marking its highest level since June 2008, amid growing expectations of a policy rate hike by the Bank of Japan. Currently, the swap market anticipates around a 62% probability of a rate increase at the BOJ's policy meeting on December 19, with this likelihood rising to almost 90% by the January meeting. The speculation surrounding a December rate hike has intensified due to Japan's inflation consistently surpassing the BOJ’s 2% target, drawing criticism that the central bank may be slow in its monetary policy response. Economically, Tokyo’s manufacturing Purchasing Managers' Index (PMI) was slightly adjusted to 48.7 for November 2025, down from an initial estimate of 48.8, following a final figure of 48.2 in the previous month. This represents the fifth consecutive month of contraction in manufacturing activities, although at a somewhat reduced pace since August.