FX.co ★ Japan 10-Year Yield Hits 30-Year High

Japan’s 10-year government bond yield climbed to 2.93% on Monday, its highest level since 1996, as markets increasingly priced in the likelihood of an imminent Bank of Japan interest rate hike despite weaker-than-expected GDP figures. Preliminary data showed the economy grew at an annualized pace of 1.1% in the second quarter, missing market forecasts of 2%, as subdued domestic demand offset robust export performance. Earlier this month, the BOJ published its economic outlook and slightly raised its GDP growth projection for the 2026 fiscal year, which ends in March 2027, to 0.6% from 0.5%. At the same time, traders are betting the BOJ could move to raise rates as early as September, following calls from a growing number of policymakers for a firmer response to mounting inflationary pressures. The central bank is also grappling with persistent yen weakness, which threatens to further fuel inflation.