FX.co ★ Japan 10-Year Yield Hits Near 17-Year High

Japan's 10-year government bond yield surged beyond 1.6% on Thursday, marking its peak in nearly 17 years. This rise comes amidst increasing political uncertainty and lackluster demand observed at a recent bond auction. Earlier in the week, a sale of 40-year Japanese government bonds attracted the lowest interest since 2011, signaling investor wariness. Speculation regarding Prime Minister Shigeru Ishiba's possible resignation intensified after the ruling coalition lost its majority in the upper house during the weekend elections. Despite Ishiba dismissing these rumors, stating he had "never discussed" stepping down, political instability continues to impact market confidence. Concurrently, demand for safe-haven bonds diminished as the global risk appetite showed signs of strengthening. Recently, Japan finalized a trade agreement with the United States that includes a 15% tariff on its exports and a commitment to invest $550 billion into the US economy. Broader market optimism was further bolstered by reported progress in US-EU trade discussions.