Japan’s 10-year government bond yield climbed above 2.1% on Tuesday, ending a two-day decline after the latest 10-year bond auction attracted stronger-than-expected demand. The bid-to-cover ratio at Tuesday’s sale came in at 3.3, versus 3.02 at the previous auction and a 12-month average of 3.23. Japanese yields also followed global bond yields higher, as escalating Middle East tensions drove energy prices higher and stoked inflation fears. The US military is expected to intensify strikes against Iran, with President Donald Trump giving no indication that operations would conclude soon. Japan faces the dual challenge of low growth and elevated inflation, complicating the Bank of Japan’s policy path, though Deputy Governor Ryozo Himino reaffirmed that the central bank will continue raising rates without specifying a timeline. Investors are now awaiting remarks from Governor Kazuo Ueda later in the day for further guidance.
