Organization: Japan's government bond yield curve may steepen into the fourth quarter.

Two strategists from Morgan Stanley MUFG Securities Co. stated in a research report that the Japanese government bond yield curve may steepen in the fourth quarter. These strategists said, "With the resilience of the U.S. economic growth and market expectations that the Bank of Japan will accelerate interest rate hikes throughout 2026, we see the market gradually raising short-term interest rate expectations," driving this steepening of the yield curve. They added, "Given signs that private consumption remains strong, our U.S. economic colleagues have raised their growth forecasts, while our Japan team currently expects the Bank of Japan's next rate hike to take place at the June 2026 meeting." The brokerage firm predicts that the yield on 10-year Japanese government bonds will be 2.30% in the first and second quarters, 2.45% in the third quarter, and 2.40% in the fourth quarter. The 10-year Japanese government bond yield rose by 2.5 basis points to 2.270%.