FX.co ★ Japan 10-Year Yield Holds Firm Ahead of BOJ

Japan’s 10-year government bond yield hovered around 2.98% on Monday, staying close to its highest level in roughly three decades as investors positioned for this week’s Bank of Japan policy meeting. The BOJ is widely expected to raise its policy rate to 1.25% on Friday, which would mark the highest level since April 1995, as the central bank grapples with persistent upside risks to inflation. Markets are also looking for signals from the BOJ on the likelihood of an additional rate hike later this year.

At the same time, US Treasury Secretary Scott Bessent has repeatedly urged the BOJ to tighten policy more aggressively in order to curb excessive yen weakness. Oil prices have also extended their gains after Saudi Arabia shut down the key East–West pipeline, which allows crude shipments to bypass the Strait of Hormuz, further stoking inflation concerns. Because Japan relies heavily on oil imports from the Middle East, its economy remains particularly vulnerable to sharp swings in energy prices.