Japan Bond Yields Climb Above 2.8% Amid Inflation Concerns

The Japan 10-year government bond yield rose above 2.8% for the second consecutive session on Monday, amid concerns over inflation and higher oil prices. The increase in yields is driven by a combination of factors, including the ongoing uncertainty surrounding efforts to reopen the Strait of Hormuz.

According to recent data, Japan's current account surplus narrowed in June, with strong exports of AI-related electronics being offset by higher imports due to increased crude oil purchases. This shift in trade dynamics adds to inflation concerns, which are already heightened by rising oil prices.

The Bank of Japan warned of growing risks of accelerating inflation in its summary of opinions from the July meeting. One board member suggested that the pace of interest rate hikes could accelerate as a result of these risks.