Japan’s 10-year government bond yield fell to around 2.61% on Friday, marking a third straight session of declines. This drop came despite data showing that Tokyo’s core inflation accelerated for the first time in eight months, reinforcing expectations that the Bank of Japan will continue to raise interest rates.
On Wednesday, BOJ Governor Kazuo Ueda reiterated his commitment to further rate hikes, contingent on economic, inflation, and financial conditions. The following day, hawkish board member Naoki Tamura also advocated for raising rates every few months. The BOJ is scheduled to announce its next policy decision on July 31.
At the same time, Japanese bond yields followed US Treasury yields lower after a benign US inflation report dampened expectations for multiple Federal Reserve rate hikes this year. Oil prices also retreated to pre-war levels as progress in US-Iran peace talks helped ease inflation concerns.
