Japan 10Y Yield Tracks US Treasury Yields Higher

Japan’s 10-year government bond yield rose to around 2.73% on Tuesday, extending recent gains and tracking a rise in US Treasury yields. The moves came as ongoing hostilities between the US and Iran pushed oil prices higher, reviving concerns about inflation and interest rate hikes. US attacks on Iran continued for a tenth straight day, with President Donald Trump warning that Tehran would be held responsible for the deaths of three US service members. With Japan heavily dependent on energy imports from the Middle East, the country remains especially vulnerable to supply disruptions. Markets are betting that higher energy costs could accelerate inflation in Japan and prompt a faster pace of Bank of Japan interest rate hikes. Additionally, the yen, which remained near a 40-year low against the dollar, could add to inflationary pressures and further strengthen the case for BOJ policy tightening.


