Japan's 2-year government bond yield is approaching the 2% mark for the first
time in about 30 years, signaling markets increasingly expect a shift toward
sustained inflation and that the Bank of Japan may need to push policy rates
toward restrictive levels. The 2-year, the maturity most sensitive to BOJ
policy, has doubled over the past 12 months and is now more than six times its
level in the same period of 2024. Further BOJ tightening may hinge on Thursday's
Tankan corporate survey; Mizuho Financial says a strong capital‑expenditure
reading would strengthen the case for an October rate hike.
