Japan’s 10-year government bond yield declined to around 2.45% on Tuesday, pulling back from 28-year highs as oil prices eased on growing optimism that a US-Iran agreement could eventually be reached. President Donald Trump said Tehran had reached out to Washington just hours after the US initiated a naval blockade of Iranian oil shipments in the Strait of Hormuz. Iranian President Masoud Pezeshkian also stated that Iran is prepared to continue peace talks, provided they remain within the framework of international law. Meanwhile, Bank of Japan Governor Kazuo Ueda emphasized on Monday the importance of monitoring the economic fallout from the Iran conflict, warning that higher oil prices could weigh on Japan’s growth outlook. Markets are now pricing in around a 40% chance of a BOJ rate hike later this month, down from nearly 60% last week.
