Japan’s 10-year government bond yield fell to around 2.27% on Tuesday, retreating from two-month highs as softer-than-expected inflation data reduced expectations for near-term Bank of Japan rate hikes. Core inflation rose 1.6% in February, the smallest increase since March 2022 amid government efforts to ease living costs, though rising energy prices from the Iran war could push inflation higher in coming months. Last week, the BOJ kept its policy rate unchanged but signaled a bias toward tighter policy to counter inflationary pressures from surging oil prices. Meanwhile, investors continued to monitor Middle East developments after President Donald Trump postponed planned strikes on Iranian energy infrastructure for five days, citing productive discussions with Iran. However, Iran denied engaging in any talks with the US.
