Japan’s 10-year government bond yield rose to around 2.4% on Friday, hovering near its highest level since 1998 amid growing expectations that the Bank of Japan will raise interest rates this month to stay ahead of inflationary pressures. Investors are now awaiting guidance from BOJ Governor Kazuo Ueda ahead of the April 28 policy meeting, following his use of forward guidance in the run-up to the previous rate hike in December.
Japanese government bond yields have climbed since the onset of the Middle East conflict, as higher energy prices fueled inflation concerns and strengthened market bets on tighter BOJ policy. However, oil prices dropped sharply this week after the US and Iran agreed to a two-week ceasefire intended to facilitate negotiations. Market attention has now shifted to diplomatic talks in Islamabad this weekend, where US Vice President JD Vance will lead a delegation in meetings with Iranian officials.
