Japan’s 10-year government bond yield dropped to around 1.18% on Tuesday, approaching two-week lows as investors prepared for the upcoming Bank of Japan monetary policy meeting later this week. The central bank is widely expected to raise interest rates on Friday, bringing Japan’s short-term borrowing costs to 0.5%, the highest level since the 2008 global financial crisis. The BOJ is also expected to revise its inflation outlook higher, with growing expectations that rising wages will help Japan sustainably meet the BOJ’s 2% inflation target. Additionally, Japan’s government bond yields tracked U.S. Treasury yields lower after U.S. President Donald Trump refrained from imposing new tariffs on his first day in office.
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