Japan’s 10-year bond yield hits a 30-year high as growth data disappoints
Japan's 10-Year Bond Yield Tops Three Decades as GDP Misses Expectations
Poinews.com – Japan's 10-year bond yield breached a threshold last unseen since September 1996 after a pair of data releases in Tokyo painted a confusing picture for fixed-income investors. The Cabinet Office disclosed that gross domestic product expanded at an annualised rate of just 1.1% in the second quarter — roughly half the 2.0% consensus forecast. The print also signalled a steep slowdown from the first quarter, which had already been revised down to 1.9%. Quarter-on-quarter, GDP rose only 0.3%, below the 0.5% projection, though it did confirm a third consecutive period of positive growth.
The breakdown of that lukewarm figure offered scant reassurance. Household consumption was flat, and corporate investment shrank by 1.2%. The lone positive contributor came from the external sector: a weakening yen boosted net exports, adding 0.5 percentage points to the quarterly total.
Why the Fixed-Income Market Kept Climbing
Far from calming sentiment, the weak GDP number landed after the benchmark rate had already touched 2.93% — a three-decade peak. Once the data hit the wires, the rate eased only marginally, and the broader upward trajectory remained intact. Market participants were clearly pricing in forces other than economic momentum.
The genuine driver, according to strategists, is the inflation-and-currency complex rather than growth itself. The GDP deflator, a broad
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