Japanese stocks surged over 3% to a one-year high, while Japanese bonds fell. The US and Japan reached a trade agreement.

The Japanese stock market soared to a one-year high on Wednesday, led by shares of automakers, while government bonds fell, following the trade agreement reached between Japan and the United States, ending months of deadlock. The Nikkei index rose by up to 3.3% to 41,070.91 points, the highest level since July last year. The Tokyo Stock Exchange's transport equipment index surged by 10.3%, with Toyota Motor Corporation rising by over 13%. The trade agreement reduces economic uncertainty and provides support for the Bank of Japan to continue raising interest rates. Traders sold Japanese government bonds, pushing up the two-year bond yield by 7 basis points to 0.82%, the highest since April 2 when US President Trump announced the radical "Liberate Japan" tariff statement, shocking the market. Media reports suggest that Japanese Prime Minister Shizo Abe will step down at the end of August, but the market is largely unaffected by this news. The yen fell by about 0.2% against the US dollar, at 146.96 yen. Trump stated on Tuesday that the US and Japan have reached a trade agreement, which includes a 15% tariff on goods imported from Japan, lower than the threatened rate of 25%. Industry and government officials familiar with the agreement also indicated that the tariff rate on Japanese cars imported into the US will be lowered from 25% to 15%. Japanese cars account for more than a quarter of its total exports to the US.