FX.co ★ Japan 10-Year Yield Rises After Weak Trade Data

On Thursday, Japan's 10-year government bond yield climbed toward 1.58%, influenced by trade data that fell short of expectations. The trade surplus dwindled to JPY 153.1 billion in June 2025, a drop from JPY 221.3 billion the previous year and significantly lower than the anticipated JPY 353.9 billion. Exports decreased by 0.5% year-over-year to JPY 9,162.6 billion. This marks the second month in a row of export decline, contradicting projections for a 0.5% increase, and is partly influenced by changes in US tariffs. The persistent weakness in exports is raising alarms about a possible contraction of Japan's economy in the second quarter, which could lead to a technical recession. At the same time, imports rose by 0.2% to JPY 9,009.5 billion, going against expectations of a 1.6% decline and representing the first increase in three months. Investors are now closely monitoring the upcoming Upper House election on July 20, amidst rising speculation that the government might introduce new fiscal stimulus initiatives. These could include enhancements to public spending or even a reduction in the consumption tax, aimed at stimulating economic growth.