Japan’s 10-year government bond yield fell to around 2.35% on Wednesday, retreating from 28-year highs after the US, Iran and Israel agreed to a two-week ceasefire to allow negotiations for a potential agreement to end the war. President Donald Trump delayed planned strikes on Iranian civilian infrastructure for two weeks in what he called a “double-sided ceasefire,” while Iran agreed to reopen the Strait of Hormuz and Israel agreed to halt hostilities during the period. Earlier this week, Japanese yields surged to a near three-decade high as markets assessed the likelihood that the Bank of Japan will raise interest rates this month amid mounting inflation pressures driven by higher energy costs. Additional pressure stemmed from the yen’s weakness, which fuels imported inflation, though the temporary ceasefire in the Middle East and the reopening of Hormuz supported a rebound in the local currency.
