FX.co ★ Japan 10-Year Yield Rises

Japan's 10-year government bond yield climbed to 1.47% on Monday, despite potential increased demand for safe-haven assets following Moody's downgrade of the US credit rating. Last Friday, the agency downgraded the US from Aaa to Aa1, highlighting concerns about a deteriorating fiscal outlook and insufficient policy measures to manage rising deficits. Within Japan, investors are deliberating over the weak GDP data in light of anticipated further policy normalization. Recent statistics indicate that Japan's economy shrank in the first quarter of 2025, with GDP dropping more significantly than market forecasts, marking the nation's first economic contraction in a year. Nonetheless, the Bank of Japan remains confident in its assessment that upward pressure on wages and prices will continue, bolstering its strategy to progressively tighten monetary policy. Meanwhile, investors are keeping a close watch on the progress of US-Japan trade negotiations, as Japan aims to conclude an agreement by June.