Japan 10-Year Yield Eases Ahead of BOJ Decision

Japan’s 10-year government bond yield edged down to around 1.57% on Monday, pulling back slightly from near 17-year highs as investors positioned ahead of the Bank of Japan’s policy decision this week. The BOJ is widely expected to leave interest rates unchanged amid lingering concerns over the economic impact of recent US tariffs. However, the central bank is likely to revise its inflation forecast higher in its quarterly outlook, reflecting persistent price pressures. Markets will also be watching for the BOJ’s updated guidance on Japanese government bond purchases, which could influence yield dynamics. Last week, JGB yields climbed after the US and Japan reached a trade deal that set a 15% tariff on Japanese exports to the US—well below the 25% initially proposed by President Donald Trump. Meanwhile, Tokyo’s July inflation data remained well above the BOJ’s 2% target, reinforcing expectations that further tightening could be on the horizon.