FX.co ★ Japan 10-Year Yield Steady Near 17-Year Peak

Japan's 10-year government bond yield remained steady around 1.7% on Tuesday, holding its highest levels since 2008 on the eve of a significant debt auction that will test investor interest amid ongoing political changes. Over the weekend, Sanae Takaichi, an advocate for fiscal expansion and proponent of stimulus measures, emerged victorious in the Liberal Democratic Party leadership contest. Her win has generated expectations of further fiscal expansion and sustained monetary easing. Attention is now focused on the composition of her forthcoming cabinet. Concurrently, Kazuo Ueda, the Governor of the Bank of Japan, reiterated on Friday his stance that interest rate increases will resume should both economic growth and inflation align with the bank’s projections. On the economic front, household spending in Japan increased by 2.3% in August, exceeding forecasts and marking the fastest growth in three months. This rise was bolstered by government initiatives aimed at alleviating cost pressures and counteracting the adverse effects of US tariffs.