Japan’s 10-year government bond yield climbed above 1.55% on Thursday, edging closer to levels last seen in 2008 in what Bank of Japan board member Asahi Noguchi attributed to market expectations of a higher terminal policy rate.
However, he noted there was no need to significantly alter the BOJ’s current strategy for tapering bond purchases.
The central bank is gradually reducing its bond purchases by ¥400 billion per quarter, aiming to reach a monthly pace of approximately ¥2.9 trillion by spring 2026.
On the data front, Japan’s core machinery orders—a key leading indicator of capital spending—surged 13% in March, defying forecasts for a 1.6% decline and marking the strongest reading in nearly two decades.
Despite this upside surprise, broader economic signals remained mixed, with May PMI data showing continued contraction in manufacturing activity and a slowdown in services sector growth.