FX.co ★ Japan 10-Year Yield Drops as PM Ishiba Resigns

Japan's 10-year government bond yield experienced a decline to approximately 1.57% on Monday, reaching its lowest level in three weeks. This shift came in the wake of Prime Minister Shigeru Ishiba's announcement over the weekend regarding his decision to resign. Ishiba's resignation was prompted by intensifying divisions within the ruling party and continuous pressure following his defeat in the national elections late last year. This political development also coincided with stalled negotiations over a trade agreement with the United States, as Tokyo vigorously defended its automotive industry against the imposition of steep tariffs. Simultaneously, economic indicators showed improvement, as second-quarter GDP growth was revised upward on both annualized and quarterly measures, driven by robust exports and consistent private consumption. This stronger economic data supports the Bank of Japan's hawkish approach, with Governor Kazuo Ueda emphasizing last week that interest rate increases are feasible if current projections remain stable.