Japan’s 10-year government bond yield climbed above 1.42% on Monday, snapping a three-day decline as investors reacted to strong business activity data. June PMI figures showed the manufacturing sector returned to growth for the first time since May 2024, while services activity expanded for a third consecutive month, signaling continued momentum in business activity.
Last week, data showed that Japan’s core inflation accelerated for the third straight month in May, rising to 3.7% — the highest level since January 2023. The persistent inflationary trend has reinforced expectations that the Bank of Japan may continue tightening monetary policy. Meanwhile, external risks remained in focus as investors monitored escalating geopolitical tensions in the Middle East. The US launched airstrikes on three Iranian nuclear sites over the weekend, joining Israel’s ongoing conflict with Tehran and raising concerns over possible retaliation and broader regional instability.
