Japan’s 10-year government bond yield slipped to around 2.96% on Thursday, retreating from 30-year highs as a sharp rally in the yen eased pressure on the Bank of Japan to pursue aggressive policy tightening. Japanese government bond yields also mirrored a decline in US Treasury yields, while oil prices paused their recent gains after President Donald Trump said the latest attacks on Iran would be short-lived, tempering inflation concerns.
At the same time, Bank of Japan board member Hajime Takata on Wednesday opened the door to larger-than-usual or consecutive interest rate hikes to rein in mounting inflationary pressures. BOJ Governor Kazuo Ueda also remarked on Tuesday that policymakers must pay closer attention to upside risks to prices when setting monetary policy, signaling that a rate increase is likely later this month.