FX.co ★ Japan 10-Year Yield Dips as Ishiba Stays in Power

In post-holiday trading on Tuesday, Japan’s 10-year government bond yield slightly decreased to approximately 1.51%. This movement comes as markets continue to process the results of the recent weekend election. Although the ruling coalition lost its majority in the upper house, this outcome was largely anticipated and had already been factored into market expectations. Prime Minister Shigeru Ishiba is expected to maintain his position, alleviating fears regarding political instability. Ishiba has confirmed his dedication to steering ongoing tariff discussions with the United States and managing significant domestic policy issues. Concurrently, opposition parties are likely to push for increased fiscal stimulus and tax reductions—initiatives which may apply downward pressure on the yen and potentially drive yields higher over the forthcoming months. On the trade front, Japan’s chief negotiator, Ryosei Akazawa, stated on Monday that he remains committed to finalizing a deal with the U.S. by the August 1 deadline, notwithstanding the electoral setback.