FX.co ★ Japan 10-Year Yield Tracks US Treasury Yields Lower

Japan's 10-year government bond yield decreased to approximately 1.49% on Thursday, retreating from recent multi-week highs, as it mirrored a broader decline in US Treasury yields. This shift came after the release of minutes from the Federal Reserve's latest meeting, revealing that most policymakers were open to considering interest rate cuts later in the year. Additionally, rising trade tensions influenced market sentiment, as negotiations between the US and Japan appeared to have hit an impasse, particularly concerning Japan's protection of its rice market. Recently, US President Donald Trump announced a 25% tariff on Japanese goods, set to take effect on August 1, explicitly rejecting any extension to this deadline. Japanese Prime Minister Shigeru Ishiba labeled the measures as "truly regrettable," yet reaffirmed Tokyo's commitment to continuing discussions with Washington in hopes of reaching a mutually beneficial agreement. A local think tank projects that the tariff could potentially decrease Japan's GDP by 0.8% in 2025 and by 1.9% cumulatively through 2029.