Nikkei 225 Index Slumps as Japan's 30-Year Bond Yields Soar to 4.11%
The Nikkei 225 Index plummeted on Wednesday, touching its lowest point since August 10 as Japan's 30-year bond yields soared. This sharp decline is largely attributed to rising odds of a Bank of Japan (BoJ) hike and potential US-Iran kinetic action.
The 30-year government bond yield jumped to 4.11%, its highest level since May 20th, while the five-year has surged to 2.13%. Globally, long-term yields are in a strong uptrend, with the US seeing its highest level in 20 years and Germany's five-year yield rising to 3.79% from below 1% during the pandemic.
The rising odds of fighting between the US and Iran have led to increased crude oil prices, with Brent hitting $91.8 and West Texas Intermediate (WTI) moving to $85. Higher oil prices will lead to higher inflation in Japan and other countries, putting more pressure on the BoJ to start hiking interest rates.
Analysts at Mizuho predicted that the bank would hike interest rates soon and more often due to rising inflation and the ongoing Japanese yen performance. The USD/JPY pair was trading at 159.36 on Wednesday, up sharply from this month's low of 155.23, indicating that the US and Japan's interventions earlier this month backfired.