Japan 10Y Bond Yield Hits Near 29-year High

Japan’s 10-year government bond yield climbed above 2.5% on Thursday, reaching its highest level since 1997, as surging oil prices driven by the Middle East conflict fueled inflation concerns and increased expectations that major central banks may need to raise interest rates. The move came after President Trump said the US would maintain its naval blockade on Iran until a nuclear deal is reached, dampening hopes for a near-term resolution to the conflict. Last week, the Bank of Japan kept its policy rate unchanged at 0.75% as it continues to balance persistent inflation risks against growth headwinds linked to the Middle East situation. However, three of nine board members supported a rate hike, while Governor Kazuo Ueda reiterated the central bank’s commitment to gradual policy tightening. Further depreciation of the yen could also intensify pressure on the central bank to raise rates, particularly if imported inflation accelerates through exchange-rate effects.

Japan 10 Year Government Bond Yield increased to 2.50%, the highest since July 1997. Over the past 4 weeks, Japan 10Y Bond Yield gained 14.05 basis points, and in the last 12 months, it increased 118.53 basis points.

Japan’s 10-year government bond yield held near 2.47% on Tuesday after the Bank of Japan left its policy rate unchanged at 0.75% for a fourth consecutive meeting,as expected. The central bank also raised its inflation forecast while lowering growth projections for FY2026 to reflect the economic impact of the Middle East conflict, which is expected to weigh on corporate profits and erode households’ real income. Notably, three of the nine policy board members backed a rate hike, highlighting rising concern over inflationary pressures linked to the Iran war. Governor Kazuo Ueda also reaffirmed the bank’s commitment to a gradual tightening path, signaling that interest rates could continue to rise as economic, price, and financial conditions evolve. Further depreciation of the yen could intensify pressure on the central bank to raise rates, particularly if imported inflation accelerates through exchange-rate effects. Japanese markets will be closed on Wednesday for a holiday.