Japan 10Y Bond Yield Hits 28-year High

Japan’s 10-year government bond yield rose to around 2.48% on Monday, reaching its highest level since July 1997 as oil prices surged again after US-Iran peace talks in Islamabad over the weekend failed to produce a deal. President Donald Trump also announced plans to blockade the Strait of Hormuz and is reportedly considering renewed strikes on Iran, raising the risk of further escalation in the global energy crisis. The prolonged conflict has clouded the outlook for Bank of Japan policy, with officials divided between those prioritizing rising inflation risks and those more concerned about downside risks to growth. A former BOJ official noted that the central bank’s typical response in periods of high uncertainty would be to wait and assess conditions. The BOJ is scheduled to hold its policy meeting on April 27-28. Meanwhile, Economy Minister Ryosei Akazawa said monetary policy could be used as a tool to curb inflation by strengthening the yen.

Japan 10 Year Government Bond Yield increased to 2.48%, the highest since July 1997. Over the past 4 weeks, Japan 10Y Bond Yield gained 23.98 basis points, and in the last 12 months, it increased 114.42 basis points.

Japan’s 10-year government bond yield climbed to around 2.4% on Friday, hovering near its highest level since 1998 amid growing expectations that the Bank of Japan will raise interest rates this month to stay ahead of inflation pressures. Investors are now watching for guidance from BOJ Governor Kazuo Ueda ahead of the April 28 policy decision, following his forward guidance approach ahead of the previous rate hike in December. Japanese government bond yields have surged since the start of the Middle East conflict, as higher energy prices intensified inflation concerns and reinforced bets on tighter BOJ policy. However, oil prices fell sharply this week after the US and Iran agreed to a two-week ceasefire aimed at enabling negotiations. Attention has now shifted to diplomatic talks in Islamabad this weekend, where Vice President JD Vance will lead a US delegation in meetings with Iranian officials.