MONEY MASTER

Japan’s government bond market is under pressure, with yields surging to multi-decade highs as  rising oil prices and geopolitical tensions  intensify inflation risks. Yields Spike to Nearly Three-Decade High Japan’s  10-year government bond yield climbed to 2.49% , its  highest level since 1997 , while the  5-year yield rose to 1.9% . The sharp move reflects growing concerns that  energy-driven inflation  will persist, following the escalation in the Middle East conflict and the US blockade of the  Strait of Hormuz . Energy Shock Hits Import-Dependent Japan As a major energy importer, Japan is particularly vulnerable to rising oil prices. The latest tensions linked to actions by  Donald Trump  have: Pushed oil prices higher Increased  import costs Added upward pressure on  consumer prices A weakening yen is compounding the situation, making imports even more expensive and amplifying inflation risks. Policy Outlook: Bank of Jap...

Japan is temporarily reversing part of its clean energy strategy, allowing  greater use of coal-fired power plants  to safeguard energy supply amid disruptions caused by the Middle East conflict. Policy Shift to Boost Energy Security The government will permit  less-efficient coal plants to participate in capacity market auctions , expanding available electricity supply. Previously, these plants were excluded as part of efforts to  reduce carbon emissions , but rising energy risks have forced policymakers to prioritise  energy security over climate goals . Energy Shock Drives Strategic Reversal The shift comes as the  closure of the Strait of Hormuz  and disruptions at major LNG facilities strain global energy supply. Japan remains highly exposed: Over 90% of oil imports come from the Middle East LNG supply risks are rising due to regional instability Increasing coal usage is expected to  offset around 500,000 tonnes of LNG demand , helping stabil...