FX.co ★ Japan 10Y Yield Holds Gains on Hawkish BOJ Remarks

Japan’s 10-year government bond yield hovered around 2.65% on Thursday, consolidating recent gains after Bank of Japan Governor Kazuo Ueda said the central bank should carefully weigh the benefits and costs of raising interest rates if upside inflation risks begin to surpass downside risks to economic growth. Markets continue to price in another BOJ rate hike later this month, as higher energy prices driven by the conflict in the Middle East further intensify inflationary pressures. At the same time, Chief Cabinet Secretary Minoru Kihara reiterated that decisions on specific monetary policy tools rest solely with the Bank of Japan, underscoring confidence in the central bank’s independence. Investors also remained alert to developments in the Middle East, where renewed clashes between the US and Iran have dampened hopes for a near-term peace agreement.