BOJ Rate Hike Anticipation Drives Down Japanese Bond Yields

Japan's 10-year government bond yield slipped to around 2.96% on Friday, marking its third consecutive decline as markets await the Bank of Japan's latest policy decision.

The BOJ is widely expected to raise interest rates in response to rising inflation and wage growth, which has been accompanied by pressure from US Treasury Secretary Scott Bessent for more aggressive rate increases.

Despite this, Japan's core inflation eased to 1.7% in August from 1.8% in July, its first slowdown in four months.

The easing of price pressures supports a hawkish BOJ outlook, while disruptions in the Middle East and falling oil prices have added to inflation risks.