Long-term interest rates are rising in major countries, while the spread between German and French rates is widening and rates in the US and UK remain at elevated levels. Next week, the release of the FOMC minutes and other events will be in focus.
Long-term interest rates, or 10-year government bond yields, continue to rise in major countries outside Japan, led by the US and the UK. In Japan, the yield briefly reached 3.128% on 1 October, its highest level since August 1996. The US yield reached 5.34%, the UK yield 5.50% and the German yield 3.65%, each marking a high for the current phase. In particular, the spread between German and French long-term interest rates widened to 1.41%, approaching 2012 levels.
Rising long-term interest rates could push up mortgage and corporate financing costs, becoming a factor that weighs on economic activity. The rise has been attributed partly to concerns about inflation and expanding fiscal deficits, and it has also been suggested that it could affect the outlook for monetary policy.
This week's events include developments in expectations for interest-rate increases following the US September employment data, the FOMC minutes due to be released on the 7th, the September ISM non-manufacturing index and the University of Michigan Consumer Sentiment Index. In Japan, developments related to monetary policy are expected to include the convening of the extraordinary session of the Diet and Prime Minister Takaichi's policy speech.
In currency markets, market participants are reportedly anticipating ranges of ¥154.0–¥161.0 per US dollar, ¥174.0–¥180.0 per euro, NZ$1.2300–NZ$1.2500 per Australian dollar and C$1.4000–C$1.4500 per US dollar. Attention will also be needed on crude oil price trends and changes in the situation in the Middle East.