Japan: 10Y Yield Gains on Hawkish BOJ Bets.

Japan’s 10-year government bond yield rose to around 2.89% on Tuesday, hovering near multi-decade highs amid growing expectations for an imminent Bank of Japan interest rate hike. Former board member Seiji Adachi said the central bank will likely raise rates next month and again as early as January, warning that keeping rates unchanged could reignite a yen selloff and accelerate import-driven inflation. Markets are currently pricing in around an 80% probability that the BOJ will hike rates by 25 basis points to 1.25% next month, up sharply from about 23% before the central bank’s July meeting. Meanwhile, the Finance Ministry is considering raising the assumed interest rate used to calculate debt-servicing costs to 3.8% for fiscal 2027, from 3% in the current budget, highlighting the growing impact of higher government borrowing costs.