FX.co ★ Japan 10-Year Yield Holds at Near 2-Decade High

On Wednesday, Japan's 10-year government bond yield maintained its position at approximately 1.87%, marking the highest level in nearly 20 years. This stability comes amid growing speculation that the Bank of Japan (BOJ) might raise interest rates this month. BOJ Governor Kazuo Ueda has recently indicated that the central bank will meticulously evaluate the advantages and disadvantages of a rate increment, pledging to take action "as appropriate." Current swaps markets reflect an estimated 80% likelihood of a rate increase on December 19, with expectations for a January hike rising to nearly 90%. This week, Finance Minister Satsuki Katayama affirmed that there is no discrepancy between the government's and BOJ's economic evaluations, emphasizing the ongoing harmony between fiscal and monetary strategies. Concurrently, Japan's latest 10-year bond auction witnessed strong demand, recording a bid-to-cover ratio of 3.59—significantly above November's 2.97 and surpassing the 12-month average of 3.2.