FX.co ★ Japan 10-Year Yield Holds at 4-Week Low

On Wednesday, the yield on Japan's 10-year government bonds hovered around 1.48%, maintaining levels near a four-week low. This stability comes amidst weak wage data that has heightened concerns about Japan’s economic prospects. Notably, real wages in June experienced a decline for the sixth consecutive month, as inflation continued to outstrip wage growth—a situation that complicates the Bank of Japan's policy considerations. This latest data exacerbates uncertainty regarding upcoming interest rate hikes, as the central bank navigates ongoing inflation concerns, sluggish wage increases, and global trade challenges. Furthermore, minutes from the BOJ’s June meeting reveal that policymakers remain open to further tightening, should trade tensions diminish. A Ministry of Finance representative emphasized the importance of maintaining flexibility, particularly in managing bond acquisitions to sustain market stability. In its recent policy announcement, the BOJ held interest rates steady but revised its inflation forecast upward, cautioning about rising downside risks stemming from international factors.