FX.co ★ Japan 10-Year Yield Hits Fresh 30-Year High

Japan’s 10-year government bond yield surged to around 2.99% on Tuesday, its highest level since 1996, as expectations grew that the Bank of Japan will raise interest rates this month to counter the effects of a weak yen and import-driven inflation. Reports indicated that US Treasury Secretary Scott Bessent urged Prime Minister Satsuki Katayama and BOJ Governor Kazuo Ueda to increase rates, echoing his earlier statement that he expects Japan’s central bank to “do the right thing.”

Japanese government bond yields also followed US Treasury yields higher, as investors ramped up bets on a Federal Reserve rate hike in September. Meanwhile, oil prices rose for a second consecutive session after US forces struck an island in the Strait of Hormuz, prompting Iran to retaliate with attacks on the UAE and Jordan. The resulting increase in energy costs is stoking inflation concerns and reinforcing expectations of tighter monetary policy worldwide.