Japan’s benchmark 10-year JGB yield climbs 1 basis point to 2.650%

Japan’s benchmark 10-year government bond yield rose 1 basis point to 2.650% on Monday, reflecting renewed investor caution amid ongoing geopolitical tensions in the Middle East and uncertainty over the Bank of Japan’s policy trajectory. The yield had previously fallen to two-week lows earlier in the week following a strong government bond auction, where ¥2.6 trillion in 10-year bonds were sold at prices above market expectations, signaling robust demand for Japanese sovereign debt.

The recent uptick in yields coincided with rising oil prices and stalled ceasefire negotiations between the U.S. and Iran, which have heightened inflationary pressures and reinforced expectations for tighter monetary policy. Markets are currently pricing in a roughly 78% probability of a rate hike by the BOJ later this month, as policymakers grapple with persistent yen weakness and rising energy costs. Investors are closely watching remarks from BOJ Governor Kazuo Ueda for further clarity on the central bank’s stance.

Looking ahead, the 10-year JGB yield is projected to remain near current levels, with analysts forecasting it to trade at 2.64% by the end of the quarter and 2.45% in 12 months.