In recent developments, Japan's 10-year government bond yield has climbed above 1.36% as of Friday, marking a continued increase over the week. This trend aligns with a general upsurge in global yields, fueled by renewed optimism in international trade and diminishing expectations for immediate reductions in US interest rates. The yields climbed in the wake of President Trump's announcement regarding a preliminary trade agreement with the UK, the first of its kind following last month's introduction of sweeping US tariffs. Additionally, President Trump suggested that tariffs on China might be eased, depending on the outcome of high-level trade discussions in Switzerland scheduled for this weekend.
Furthermore, the rise in Japanese bond yields mirrored the upward movement in US yields, driven by Federal Reserve Chair Jerome Powell's recent statements. Powell dismissed calls for a precautionary rate cut, citing ongoing inflation risks and concerns regarding the labor market. On the domestic front, Japan's economy received a boost from personal spending data for March that exceeded expectations, providing a positive outlook. Yet, the persistent decline in real wages, now in its third consecutive month, has moderated optimism, highlighting the challenges that remain in Japan's economic recovery.
