FX.co ★ Japan 10-Year Yield Retreats

On Tuesday, the yield on Japan's 10-year government bond eased to approximately 2%, following two sessions of record highs. This decline was primarily driven by potential interest in dip-buying. According to a senior strategist specializing in Japanese interest rates, purchasing bonds at the prevailing levels could yield higher returns compared to the interest accrued from Bank of Japan current account deposits, provided yields remain near 2.2% within the next year. Recently, yields have risen as market participants anticipate further rate hikes after the Bank of Japan's recent decision to elevate borrowing costs to 0.75%, a level not seen in three decades. The market is also gearing up for increased bond issuance to fund the government's new fiscal stimulus initiatives. Concurrently, investors are keenly monitoring BOJ Governor Kazuo Ueda, who is scheduled to address the Keidanren business lobby on Christmas Day, for additional insights into the central bank's future policy direction.