Japan’s 10-year government bond yield stayed above 1.6% on Monday, hovering near 17-year highs as investors weighed the Bank of Japan’s policy outlook against the latest economic data. Capital spending rose 7.6% in Q2 2025, up from 6.4% in Q1 and above expectations of 6.2%, underscoring strong corporate investment. At the same time, the August manufacturing PMI was revised down to 49.7 from 49.9, marking the 13th contraction in factory activity over the past 14 months. BOJ Governor Kazuo Ueda recently noted that wages are expected to climb further amid a tightening labor market, bolstering expectations that conditions for another rate hike are gradually taking shape. In July, the BOJ left rates unchanged but raised inflation forecasts and struck a more upbeat view on the economy.
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