FX.co ★ Japan 10-Year Yield Holds Steady

Japan’s 10-year government bond yield held steady at around 2.18% on Thursday, moving sideways through the week as investors weighed escalating risks from the Middle East conflict and sharp swings in oil prices. Crude prices climbed for a second consecutive day, as fears of a prolonged war involving Iran overshadowed a coordinated release of strategic oil reserves by major economies. The International Energy Agency has authorized its largest-ever drawdown, totaling 400 million barrels, including 172 million barrels from the United States and 80 million barrels from Japan.

Japan remains highly vulnerable to oil supply shocks because of its heavy dependence on Middle Eastern energy imports, though authorities have signaled readiness to deploy emergency reserves to cushion any disruption. In the bond market, a sale of five-year Japanese government bonds this week attracted demand above the 12-month average, underscoring waning expectations for an imminent interest rate hike by the Bank of Japan.