Asia-Pacific markets rose on Friday, following gains on Wall Street as geopolitical concerns eased and investors weighed the Bank of Japan’s decision to keep interest rates steady.
Japan’s central bank kept its key interest rate at 0.75% as the country prepares for an election that will see Prime Minister Sanae Takaichi, who favors monetary easing and fiscal support, face voters for the first time. Takaichi dissolved Japan’s lower house of parliament on Friday, and the country will go to early elections on February 8.
The yield on Japan’s 40-year government bond fell more than 4 basis points to 3.953% after hitting a record high on Tuesday.
Meanwhile, yields on shorter maturities rose, reports SEEbiz. Japan’s 10-year government bond yield rose about 2 basis points to 2.259%, while 20-year bond yields rose less than a basis point to about 3.204%.
HSBC said it expects the Bank of Japan’s next rate hike of 25 basis points in July 2026, but warned that further yen depreciation could speed up the timing and open the door to further rate hikes.
The bank flagged April as a possible alternative, citing the release of the BOJ’s quarterly outlook report and improved clarity on this year’s Shunto wage talks, with a potential further 25 basis point hike later in 2026.
