FX.co ★ Japan 10Y Yield Hovers at 28-Year High

Japan’s 10-year government bond yield hovered near 2.43% on Tuesday, holding at its highest level in nearly three decades amid expectations that the Bank of Japan will raise interest rates this month. The anticipated move comes as inflationary pressures build, driven in part by higher energy costs. Markets are now pricing in a more than 70% probability of a rate hike at the BOJ’s April meeting, with additional increases expected later in the year. On Friday, the IMF also urged the BOJ to continue gradually lifting its policy rate toward a neutral level in order to contain underlying inflation. Further upward pressure comes from the yen’s weakness, which is contributing to imported inflation, while oil prices have risen again as President Donald Trump’s deadline for Iran to reopen the Strait of Hormuz—or face intensified attacks on civilian infrastructure—draws near.