Japan’s 10-year government bond yield held around 2.43% on Tuesday, hovering at its highest level in nearly three decades on expectations that the Bank of Japan will raise interest rates this month amid mounting inflation pressures fueled by higher energy costs. Markets now assign over a 70% probability of a BOJ rate hike at its April meeting, with further increases anticipated later in the year. On Friday, the IMF also urged the BOJ to continue gradually raising its policy rate toward a neutral level to contain underlying inflation. Additional pressure stems from the yen’s weakness, which drives imported inflation, while oil prices climbed further as President Donald Trump’s deadline for Iran to reopen the Strait of Hormuz or face intensified attacks on civilian infrastructure approaches.
