02.04.202604:12:41UTC+00Japan 10Y Yield Rebounds to Record High

Japan’s 10-year government bond yield rose to a record high of 2.38% on Thursday, snapping a three-day losing streak, as expectations of a Bank of Japan interest rate hike intensified. Markets now see a 71% probability of a BoJ rate increase, reflecting in part mounting concerns that inflation will accelerate due to higher oil prices amid the ongoing conflict in the Middle East.

US President Trump warned that new military action against Iran could occur within the next two to three weeks, even as he described the conflict as “very close” to being resolved and stressed that diplomatic efforts are continuing.

Japan, a major importer of Middle Eastern crude, has been particularly affected. Domestic gasoline prices surged to all-time highs in mid-March before retreating slightly on the back of government subsidy measures.

Against this backdrop, newly appointed BoJ board member Toichiro Asada struck a cautious tone in his first public briefing, signaling a data-dependent stance and underscoring the central bank’s delicate task of supporting economic growth while containing inflation.