Japanese Bond Yields Retreat on Falling Oil Prices
Japan's 10-year government bond yield retreated to around 2.82% on Wednesday, a decline from its three-week high, as oil prices plummeted due to reports of an imminent agreement between the US and Iran to reopen the Strait of Hormuz.
The decrease in oil prices eased concerns over inflation and subsequently reduced pressure for aggressive monetary tightening.
Despite the pullback, Japanese bond yields remained supported by growing expectations of another Bank of Japan interest rate hike, following last week's decision to leave its policy rate unchanged at 1%.
Policymakers acknowledged upside inflation risks stemming from demand-driven price pressures linked to the Middle East conflict and minutes from the July policy meeting showed several board members expect a significant boost in consumer inflation during the second half of the current fiscal year as companies increase prices across various goods.