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Japan Two-Year Yields Rise on BOJ Rate Hike Expectations Despite Cooling Inflation

Japan's two-year government bond yield climbed following tepid demand at a recent debt auction. Investors are positioning for an interest rate increase from the Bank of Japan in coming weeks. The central bank is widely expected to raise rates as soon as next month despite a surprise slowdown in Tokyo's key inflation gauge, which hit a four-year low. Finance Minister Satsuki Katayama signaled authorities remain ready to intervene in foreign exchange markets if disorderly trading or speculative activity emerges. The auction weakness underscores investor caution ahead of the monetary policy shift, even as inflation pressures ease. Nomura Holdings, Japan's largest brokerage, raised its profit targets following record annual earnings, signaling confidence in financial sector stability.