Long-term interest rate hits 29-year high of 2.830%, government bond selling accelerates on 'Basic Policy Shock'

Long-term interest rate surges to 2.830%, highest in 29 years since 1997 In the Tokyo bond market on July 6, the yield on new 10-year government bonds, a key indicator of long-term interest rates, rose to 2.830%, updating a high not seen in about 29 years. The 'Basic Policy' draft shown by the Takaichi administration at the end of June saw a retreat in fiscal consolidation wording, strengthening concerns over fiscal deterioration and accelerating government bond selling. Market participants have dubbed it the 'Basic Policy Shock', and views that the Bank of Japan's rate hike pace will lag are also supporting the rise in interest rates. 12345

Yen in upper 162 yen range, yen selling persists despite intervention vigilance In the Tokyo foreign exchange market on July 6, the yen fell to the upper 162 yen range against the dollar. Amid continued vigilance over possible currency intervention by the government and Bank of Japan, yen selling driven by awareness of the Japan-U.S. interest rate differential dominated. Additionally, real demand dollar buying by domestic importers contributed, and the dollar rose more than 1 yen from the previous weekend. 67

Nikkei average down 6 yen, TOPIX hits record high In the Tokyo stock market on July 6, the Nikkei average edged down 6 yen from the previous weekend to 69,737 yen, a slight decline. While profit-taking selling emerged in semiconductor and AI-related stocks, a continued shift of funds into laggard stocks pushed the TOPIX up for a sixth straight trading day to 4,101.96, updating its all-time high. Lower crude oil prices and gains in U.S. stocks also supported market sentiment. 891011

NY Dow hits 53,000 for first time, updates record high for second straight day In the New York stock market on July 6, the Dow Jones Industrial Average rose 155 dollars from the previous weekend to 53,055 dollars, updating its record high for the second consecutive trading day and crossing the 53,000 level for the first time. Financial and IT-related stocks were bought, and the Nasdaq Composite Index also rose sharply. Expectations of strong earnings and lower long-term interest rates were buying catalysts. 1213

Disco's April-June quarter shipments hit record high, generative AI demand continues Disco, a semiconductor manufacturing equipment maker, announced on July 6 that its individual shipments for the April-June quarter of 2026 reached 116.5 billion yen, up 25.3% year-on-year, setting a quarterly record. Shipments of precision processing equipment and tools, mainly for generative AI, have been growing, demonstrating the strength of AI-related demand. 14

Bipartisan national council to resume consumption tax cut discussions on July 13 The bipartisan National Council on Social Security agreed to hold a working-level meeting on July 13 to resume discussions on reducing the consumption tax on food items. This follows the outlook for normalization of the House of Councillors, and aims to consolidate opinions on proposals such as a 1% reduction starting next April. 15