FX.co ★ Japan 10-Year Yield Hits 1-Week Low

Japan’s 10-year government bond yield dipped to approximately 2.23% on Monday, marking a one-week low. This shift occurred following polls that showed a slight decrease in support for Prime Minister Sanae Takaichi as the campaign for the lower house election commenced. This election, scheduled for early February, has been called by Takaichi to consolidate political power and push for expansionary fiscal measures. On the monetary policy front, the Bank of Japan maintained its interest rates last week, following a previous increase to a three-decade high of 0.75% in December. The central bank signaled its willingness to further raise rates should economic and inflation forecasts materialize, and accordingly, it adjusted its inflation expectations upwards. Concurrently, the yen reached its highest level in over two months amid growing concerns about a possible joint intervention by Japan and the United States to bolster the currency.