FX.co ★ Japan 10-Year Yield at 2-Week High

Japan’s 10-year government bond yield rose to around 2.81% on Friday, advancing for a fourth straight session and hitting a two-week high as markets continued to price in further interest rate hikes by the Bank of Japan. Expectations have strengthened that the BOJ will raise its policy rate by 25 basis points to 1.25% by December, with some investors anticipating a move as early as October, as the weaker yen and higher energy prices stoke inflation concerns.

At the same time, Brent crude oil climbed above $100 per barrel amid escalating tensions in the Middle East, heightening fears of additional supply disruptions and amplifying imported inflation risks for Japan. In parallel, worries over Japan’s fiscal outlook also pressured government bonds, as rising debt-servicing costs have come under greater scrutiny with longer-term yields reaching multi-decade highs. Higher US Treasury yields—led by the 10-year yield moving above 4.7%—added further upward pressure on Japanese bond yields, as investors reassessed the global interest rate environment.