Japanese Yen (JPY) is outperforming and 10-year JGB yields edged up to almost 1.30%, highest level since April 2011, Société Générale’s FX analysts note.
JPY is outperforming and 10-year JGB yields
“Japan wage growth ran hot in December. Nominal cash earnings came in 1.1pts higher than expected at near a three-decade high of 4.8% y/y vs. 3.9% in November (revised up from 3.0%) reflecting a jump in bonuses.”
“The less volatile scheduled pay growth for full-time workers matched consensus at 2.8% y/y vs. 2.7% y/y in November and is down from a series high of 3% in July 2024. This is consistent with the Bank of Japan (BOJ) projection for inflation to stabilize around its 2% target in 2026 assuming productivity growth of 1%.”
“Bottom line: the BOJ policy rate is still expected to peak around 1.00% over the next two years which curtails upside for JPY and JGB yields.”
Source: https://www.fxstreet.com/news/jpy-boj-policy-rate-is-still-expected-to-peak-around-100-societe-generale-202502051115