Japan’s 10-year government bond yield rose above 3% on Tuesday, its highest level since September 1996, as the global bond selloff intensified on the back of surging energy prices, rising inflation risks, and growing fiscal concerns. The Bank of Japan is widely expected to raise its policy rate to 1.25% on Friday—its highest since April 1995—as the central bank confronts persistent upside risks to inflation. Markets will be watching closely for any BOJ guidance on the likelihood of an additional rate hike later this year.
US Treasury Secretary Scott Bessent has also repeatedly pressed the BOJ to tighten policy more aggressively to address what he views as excessive yen weakness. At the same time, oil prices extended their gains as Saudi Arabia’s East-West pipeline remained shut, and Ukraine challenged President Trump’s assertion that it had already reached an agreement with Russia to halt attacks on energy infrastructure.
