Japan 10Y Yield Hits 28-Year High
Japan’s 10-year government bond yield rose to around 2.4% on Monday, reaching levels not seen since July 1997, amid rising expectations that the Bank of Japan will tighten policy in response to mounting inflation pressures driven by higher energy prices. Markets now assign more than a 70% probability of a BOJ rate hike this month, with expectations for over two additional increases by year-end. The IMF on Friday also urged the BOJ to continue gradually raising its policy rate toward a neutral level to curb underlying inflation. Additional pressure comes from the yen’s weakness, which fuels imported inflation. Oil prices climbed further after President Donald Trump escalated threats against Iran, though Tehran dismissed the latest ultimatum. Japan remains highly exposed to oil supply disruptions due to its dependence on Middle East imports, prompting releases from emergency reserves and efforts to secure alternative energy sources.
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