Japan’s 10-year government bond yield climbed to around 2.74% on Wednesday, its highest level in a week, tracking gains in US Treasury yields as Middle East tensions pushed oil prices higher.
Rising energy costs could add to inflationary pressures in Japan and reinforce expectations that the Bank of Japan may accelerate its pace of rate increases.
Meanwhile, the yen attempted to recover from a 40-year low after reports that BOJ officials are open to faster rate hikes than markets currently anticipate, alongside renewed speculation of possible currency intervention from Tokyo.
Finance Minister Satsuki Katayama said authorities would take decisive action if excessive yen weakness continues.
Japan intervened in April and May when the currency fell below 160 per dollar, but the impact was limited amid broad dollar strength and still-low domestic interest rates.