Japan's 10-Year Yield Retreats Amid Yen Rally
Japanese government bond yields retreated from a 30-year high on Thursday, as the yen's sharp rally reduced pressure on the Bank of Japan to tighten policy aggressively. The 10-year government bond yield fell to around 2.96%, tracking lower US Treasury yields.
The yen's rise was partly due to President Donald Trump's statement that the latest attacks on Iran would be short-lived, easing inflation concerns and halting oil prices' rally. This reduction in inflation pressures may limit the Bank of Japan's need for aggressive interest rate hikes.
Bank of Japan board member Hajime Takata recently raised the possibility of outsized or back-to-back interest rate hikes to curb rising inflationary pressures. BOJ Governor Kazuo Ueda also signaled that an interest rate hike is likely later this month, citing a need to pay greater attention to upside price risks when conducting monetary policy.