Benchmark JGB yields fall as signs of Iran ceasefire ease inflation fears
- The 10-year JGB yield fell 5 basis points (bps) to 2.355%
TOKYO: Benchmark Japanese government bonds (JGBs) rallied on Wednesday as early signs of a pause in hostilities in the Middle East eased worries about rising energy costs and inflation.
The 10-year JGB yield fell 5 basis points (bps) to 2.355%. Yields move inversely to bond prices. The 20-year yield slid 7 bps to 3.260%.
The 30-year yield sank 6 bps to 3.600%. Yields move inversely to bond prices.
The benchmark yield had climbed to a 27-year high of 2.43% on Tuesday, driven by surging oil prices, a weaker yen and mounting concerns over fiscal expansion, all of which stoked inflation fears.
US President Donald Trump said on Tuesday he had agreed to a two-week ceasefire with Iran, less than two hours before a deadline he had set for Tehran to reopen the Strait of Hormuz.
Japan’s economy is particularly vulnerable to sharp rises in crude oil prices because of its heavy reliance on imported energy.
Inflationary risks erode the real value of fixed bond payments and increase pressure on the Bank of Japan to tighten monetary policy to contain prices.
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