Japan’s 10-year government bond yield fell to around 2.23% on Wednesday, declining for a second consecutive session as investors awaited the upcoming Bank of Japan policy decision. The central bank is widely expected to keep interest rates steady while assessing the impact of the Middle East conflict on the domestic economy. However, the BOJ could signal a hawkish bias as a weak yen and elevated oil prices from the Iran war fuel inflationary pressures in Japan, which depends heavily on Middle East oil. Meanwhile, Prime Minister Sanae Takaichi is set to meet US President Donald Trump this week, navigating a diplomatic balancing act after Trump initially urged Japan to deploy warships to the Strait of Hormuz before retracting the demand. Data also showed Japanese exports rose 4.2% in February year-on-year, surpassing expectations of 1.6% but slowing sharply from January’s 16.8% jump.
