Japan’s 10-year government bond yield climbed to around 2.81% on Friday, rising for a fourth consecutive session and reaching a two-week high as markets continued to price in further Bank of Japan rate hikes.
Expectations strengthened that the BOJ will raise its policy rate by 25 basis points to 1.25% by December, with some seeing a move as early as October, as a weaker yen and rising energy costs fuel inflation concerns.
At the same time, Brent crude climbed above $100 per barrel amid escalating Middle East tensions, raising fears of further supply disruptions and adding to imported inflation risks for Japan.
Separately, concerns over the country’s fiscal outlook also weighed on government bonds, with rising debt-service costs becoming a growing focus as longer-term yields reached multi-decade highs.
Rising US Treasury yields, with the 10-year yield climbing above 4.7%, added further upward pressure on Japanese bond yields as investors reassessed the global interest rate outlook.