FX.co ★ Japan 10-Year Yield Falls Despite Hawkish BOJ Tone

Japan's 10-year government bond yield decreased to approximately 1.62% on Friday, reaching its lowest point in four weeks. This decline occurred despite Bank of Japan Governor Kazuo Ueda expressing readiness to raise interest rates contingent upon bolstered confidence in the economic outlook. Governor Ueda stated he would evaluate forthcoming data ahead of this month's policy meeting, indicating that the BOJ remains open to a potential near-term adjustment despite ongoing political uncertainty and the challenges posed by U.S. tariffs. However, market sentiment reflects only a slight expectation of a rate increase in October. In the domestic political landscape, investors are closely monitoring developments as opposition parties have not yet reached a consensus on the ruling Liberal Democratic Party's proposal, set for October 21, to vote for a new prime minister. Globally, investor risk aversion—propelled by concerns over U.S. credit issues, U.S.-China trade tensions, and the extended U.S. government shutdown—has heightened demand for safer investment vehicles like bonds, thereby driving yields lower.