Japan 10-Year Yield Falls as Oil Prices Decline
Japan’s 10-year government bond yield fell roughly 5 basis points to 2.62% on Thursday, reaching its lowest level in a week as progress in US-Iran peace negotiations drove oil prices back to pre-conflict levels and eased inflation concerns. As a major importer of Middle Eastern oil, Japan remains particularly sensitive to geopolitical developments in the region. On the domestic front, Bank of Japan board member Naoki Tamura said the central bank should continue raising interest rates every few months, arguing that the policy rate should gradually approach a neutral level of around 2%. He added that inflationary pressures are likely to intensify regardless of Middle East developments, as higher import costs are expected to be passed on to consumers more rapidly and broadly than after Russia’s 2022 invasion of Ukraine, reflecting changes in corporate pricing behavior.

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