FX.co ★ Japan 10-Year Yield Approaches 2008 High

Japan's 10-year government bond yield rose above 1.55% on Thursday, nearing levels last observed in 2008. This increase, according to Bank of Japan board member Asahi Noguchi, is largely due to market anticipations of a higher endpoint for the policy rate. Nonetheless, he asserted there is no compelling reason to substantially modify the BOJ's present approach to gradually tapering bond purchases. The central bank is systematically decreasing its bond acquisitions by ¥400 billion each quarter, with a target to achieve a monthly rate of approximately ¥2.9 trillion by the spring of 2026. On the economic data front, Japan's core machinery orders—regarded as a crucial indicator of future capital expenditure—unexpectedly surged by 13% in March, challenging predictions of a 1.6% drop and registering the most robust growth in nearly 20 years. Despite this optimistic development, broader economic indicators displayed a mixed outlook, with May's PMI data indicating continued contraction in manufacturing activity coupled with a deceleration in the growth of the services sector.