FX.co ★ Japan 10-Year Yield Rebounds as Oil Prices Advance

Japan’s 10-year government bond yield climbed to around 2.69% on Monday, rebounding from two-week lows as rising oil prices pressured bond markets amid ongoing uncertainty over a durable ceasefire between the US and Iran. Over the weekend, Washington and Tehran exchanged proposals seeking amendments to a draft agreement aimed at extending the ceasefire and reopening the Strait of Hormuz, though it remained unclear whether the talks were achieving substantive progress.

Markets remain divided on whether the Bank of Japan will raise interest rates this month, with policymakers confronting heightened uncertainty linked to tensions in the Middle East. Investors are now awaiting comments from BOJ Governor Kazuo Ueda later this week for clearer signals on the central bank’s policy outlook. Meanwhile, Japan’s capital spending was flat in the first quarter compared with a year earlier, underscoring a loss of momentum in corporate investment activity.