Japan 10Y Yield Edges Higher Ahead of BOJ

Japan’s 10-year government bond yield rose above 2.25% on Monday, reaching five-week highs ahead of an expected rate hold from the Bank of Japan amid heightened uncertainty over the Iran war’s impact on the domestic economy. Last week, BOJ Governor Kazuo Ueda warned that a weak yen could amplify imported inflation as oil prices rise, potentially pressuring the central bank to accelerate policy normalization. Ueda noted that the effect of exchange rates on inflation appears larger than in the past, giving them greater weight in policymakers’ decisions. The Iran war and surging oil prices continued to weigh on Japan’s oil-importing economy, dampening growth prospects and raising inflation risks. Meanwhile, Japanese Defense Minister Shinjiro Koizumi said the country currently has no plans to deploy warships to the Strait of Hormuz despite US pressure on other nations.

The yield on the US 10-year Treasury note fell to around 4.25% on Monday after rallying for two straight weeks, as reports that the US will soon announce a coalition of countries to escort ships through the Strait of Hormuz eased some market fears. Markets are also weighing the possibility of US-Iran negotiations as the Middle East conflict entered its third week. Oil prices stabilized despite US strikes on military targets at Iran’s main oil-export hub of Kharg Island over the weekend and threats to target energy infrastructure if Tehran interferes with transit through the Strait of Hormuz. Still, Treasury yields remained near recent highs as elevated energy costs fueled inflation concerns, reducing expectations that the Federal Reserve will cut interest rates. The central bank is widely expected to hold rates steady this week in what would be Chair Jerome Powell’s penultimate meeting.

Japan 10 Year Government Bond Yield increased to 2.24%, the highest since February 2026. Over the past 4 weeks, Japan 10Y Bond Yield gained 2.23 basis points, and in the last 12 months, it increased 70.89 basis points.