Nikkei 225 Index Plummets as Japan Bond Yields Surge

The Nikkei 225 Index plummeted to its lowest level since August 10 as Japan's bond yields soared. The 30-year government bond yield jumped to a two-month high of 4.11%, while the five-year yield rose to 2.13%. This surge in long-term yields is part of a global trend, with the US and German five-year yields reaching their highest levels in over 20 years.

The rising odds of war between the US and Iran are contributing to higher oil prices, which will put pressure on Japan's economy and lead to further interest rate hikes. Analysts at Mizuho predict that the Bank of Japan (BoJ) will hike rates soon and more often in response to inflation concerns.

The Japanese yen is under pressure, with the USD/JPY pair trading at 159.36, up from its monthly low of 155.23. This is a sign that earlier interventions by the US and Japan have backfired, and the market expects further BoJ tightening to narrow the rate gap between the two countries.

Nikkei 225 Index companies such as Softbank, Kioxia, and Tokyo Electron led the decline, with shares down by 7.48%, 8.38%, and 2.16% respectively. The path of least resistance is bearish, with the next key target to watch being the Major S/R pivot point at 62,500.