Week in review
- Euro inflation rate increased 3.3% y/y in August
- Australia GDP grew 2.1% y/y in 2Q26
Week ahead
- China August imports and exports
- ECB interest rate decision
- U.S. August inflation rate
Thought of the week
Japan’s rate market is rapidly repricing for a more assertive policy path, with investors now treating a near-term rate increase as highly likely and moving beyond the prior assumption of a roughly semiannual tightening cadence. That shift is feeding directly into currency, bond, fiscal and banking dynamics: the yen’s recent stabilization appears increasingly dependent on credible policy follow-through, while the rise in long-term government bond yields to levels not seen in decades is challenging assumptions built during the low-rate era. Higher yields can support better capital discipline and bank profitability, but the nuance is that the adjustment also raises debt-servicing costs, exposes unrealized losses in bond portfolios and tightens the fiscal trade-off at a time when public spending ambitions remain elevated. For investors, portfolios may need to account for a more fluid rate regime, greater sensitivity to fiscal signals and a currency whose direction increasingly hinges on central bank credibility.
Japan 10Y government bond yield and central bank policy rate
Bond yield, historical policy rates and market implied forward rates*
Source: Bank of Japan, FactSet, J.P. Morgan Asset Management.
*Expectations are based on forward swap rates. Past performance and forecasts are not a reliable indicator of current and future results. Data reflect most recently available as of 02/09/2026.
Market data
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All returns in local currency unless stated otherwise.
Currencies’ return are based on foreign currencies per U.S. dollar. An appreciation of the foreign currency against the U.S. dollar would be positive and a depreciation of the foreign currency against the U.S. dollar would be negative.