FX.co ★ Japan 10Y Yield Scales Fresh 29-Year High

Japan’s 10-year government bond yield climbed toward 2.8% on Monday, marking a new 29-year high as surging oil prices tied to the Iran conflict intensified inflation concerns and reinforced expectations of a near-term rate hike by the Bank of Japan. In the latest developments, President Trump warned Iran to “get moving” or face consequences after leaving China without securing major trade breakthroughs or making meaningful progress toward ending the conflict and reopening the Strait of Hormuz. Further bolstering hawkish expectations, BOJ board member Kazuyuki Masu last week urged that rates be raised as soon as possible, citing increasingly persistent inflation risks stemming from the war. The sharp depreciation of the yen has also heightened pressure on the central bank to tighten policy in an effort to contain mounting inflationary pressures. Investors are now focusing on upcoming GDP, trade, and inflation releases this week for additional insight into the strength of the Japanese economy.