Japan’s 10-year government bond yield rose to around 2.94% on Monday, nearing its highest level in three decades and mirroring gains in US Treasury yields. The move followed hawkish comments from Federal Reserve Chair Kevin Warsh, which reinforced expectations for a US interest rate hike in September.
Global bond yields also came under upward pressure after oil prices jumped, following US military strikes on Iranian rocket launchers that were reportedly preparing to deploy mines in the Strait of Hormuz. The escalation intensified inflation concerns, further driving yields higher worldwide.
On the domestic front, traders are increasingly factoring in a Bank of Japan rate hike in September amid worries over yen weakness and inflation fueled by higher import costs. BOJ Deputy Governor Ryozo Himino said last week that the central bank remains alert to inflation risks and will consider whether additional policy tightening is warranted.
Meanwhile, US Treasury Secretary Scott Bessent said he expects the BOJ to “do the right thing” on monetary policy when asked whether the central bank should contemplate back-to-back interest-rate increases to address the depreciating yen.
