Japan Steps Closer to Inflation Target, 10-year Breakeven Rises to 9-year High

Japan’s 10-year breakeven inflation rate climbed to 1.16 percent, the highest since November 2014, a further sign that the Bank of Japan is making some progress towards its goal of stabilizing inflation.
The inflation rate is investors’ expectations for the average inflation rate over the next 10 years.
The yield on Japan’s 10-year government bond rose to 0.465% on Monday, the highest level since April, as the yen remained relatively weak and data last week showed wages rose more than economists expected.
“Given that domestic inflation and wage growth are stronger than in 2014, there is more room for inflation expectations to rise,” said Naka Matsuzawa, chief strategist at Nomura Securities.
The Bank of Japan on Monday increased its bond purchases in an attempt to slow the rise in long-term government bond yields.