Japan’s 10-year government bond yield held steady around 2.18% on Thursday, trading sideways through the week as investors contended with mounting risks from the Middle East conflict and volatile oil prices. Oil surged for a second day as the prospect of a protracted Iran war overshadowed a coordinated release of oil reserves by major economies, with the IEA approving its largest-ever release of 400 million barrels of oil. That includes 172 million barrels from the US, while Japan will release 80 million barrels from its reserves. Japan remains highly exposed to oil supply shocks due to its reliance on Middle Eastern energy imports, though it stands ready to tap emergency reserves to offset disruptions. Meanwhile, a sale of Japan’s five-year government bonds this week drew stronger demand than the 12-month average, reflecting fading expectations of a potential Bank of Japan rate hike.
