Japanese Government Bonds: Yields Likely Sensitive to Upward Pressure

■ Bank of Japan board member Takata reiterated his support for 

Interest rate hikes pushed the 10-year government bond yield up to 1.67% at one point. 

■ If expectations for a rate hike by the Bank of Japan before its December meeting strengthen, upward pressure on yields may persist. 

10-year government bond: 1.66% (up 0.03% from last weekend). Japanese government bond yields fell (yields rose). Yields increased to 1.67% at the start of the week after Bank of Japan board member Takata reiterated his support for a rate hike. Later, the nomination of LDP president Takaichi as prime minister, combined with market expectations that she would implement expansionary fiscal policies emphasizing fiscal discipline, slowed the rise in yields, which fluctuated between 1.65% and 1.67%.  

From the 27th to the 29th, US President Trump and Treasury Secretary Bessent will visit Japan, which may prompt the market to associate this with increased defense spending, thereby supporting yields. Additionally, although the market has already priced in a rate cut by the Federal Open Market Committee (FOMC), if the Bank of Japan advances its preparations for a rate hike during its monetary policy meeting, the market could preemptively expect a rate hike at the December meeting, thereby exerting upward pressure on yields.