FX.co ★ Japan 10-Year Yield Hovers at 29-Year High

Japan’s 10-year government bond yield hovered around 2.88% on Thursday, staying close to its highest level in nearly three decades. The renewed conflict between the US and Iran pushed oil prices higher, stoking inflation concerns and bolstering expectations of further interest rate hikes. Disruptions to global energy supplies also weighed on Japan’s economy and, by extension, its currency and bond market, given the country’s heavy dependence on Middle Eastern oil imports.

At the same time, investors remained wary of rising fiscal spending and increased government borrowing after Japan announced a broad, long-term economic strategy with substantial spending commitments that may necessitate additional debt issuance. Separately, the government revised the latest draft of its annual policy agenda, calling for an appropriate monetary policy stance that supports stable price growth.