Japanese bond yields hit record highs as inflation pressures mount.

Japanese bond yields hit record highs as inflation pressures mount. Five-year yields surged to 1.800% and benchmark 10-year yields climbed to 2.350%, marking a two-month peak. The Bank of Japan's revised data revealed demand exceeded supply for 15 consecutive quarters, signaling persistent inflationary pressures. Combined with Middle East tensions driving crude oil costs higher, investors are repricing expectations for faster and more aggressive rate hikes. Japan's heavy dependence on imported energy makes it particularly vulnerable to oil price spikes, which feed into domestic inflation and erode bond values. Domestic investors are now revising forecasts upward for BOJ rate increases. The two-year yield, most sensitive to policy moves, reached its highest level since May 1995, reflecting growing conviction that monetary tightening will accelerate sooner than previously anticipated.