Japan’s 10-year government bond yield climbed to 2.93% on Monday, its highest level since 1996, as investors increasingly bet the Bank of Japan (Japan’s central bank) will raise interest rates soon despite softer-than-expected growth data. Preliminary figures showed the economy expanded at an annualized 1.1% in Q2, missing market expectations of 2% as weak domestic demand offset strong exports. Earlier this month, the BOJ slightly lifted its GDP growth forecast for the 2026 fiscal year ending in March 2027 to 0.6% from 0.5%. Traders are now speculating that a rate increase could come as soon as September after a growing number of policymakers called for a stronger response to mounting inflationary pressures, while persistent yen weakness could add further upward pressure on prices.