10-year government bond yields have steadily risen since the BoJ effectively raised the yield ceiling from 0.5% to 1.0% last Friday and could test the new ceiling by year-end. If that happens, we expect the Bank to capitulate. Meanwhile, the government this week recommended a record 4.3% hike to the minimum wage. While we expect that to give a slight boost to wage growth, we doubt it will be enough to tip the Bank into changing its accommodative stance.
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