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Bonds

Japan 10Y Yield Hits Over 1-Month High

Japan’s 10-year government bond yield climbed to around 2.86% on Thursday, reaching its highest level in more than a month as markets assessed the likelihood of a Bank of Japan interest rate hike in September after a growing number of policymakers called for a stronger response to mounting inflation pressures. Meanwhile, producer prices in Japan continued to rise at an elevated pace in July, keeping cost pressures on companies high. Producer inflation rose 7.2% in July, easing slightly from 7.3% in June, which was the highest level since March 2023. The BOJ recently attributed the rise in producer prices partly to higher oil costs following the Middle East conflict, along with increases in nonferrous metal and machinery prices amid stronger global demand linked to the artificial intelligence boom. Tight labor market conditions have also continued to drive wage pressures as companies compete to attract and retain workers.

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