Energy bottleneck controlled by the Middle East, Japanese bond yields curve fluctuating significantly.

Due to the escalation of the Middle East conflict driving up oil prices and sparking concerns about inflation, the yields on Japan's ultra-long-term government bonds have been increasing. The 30-year government bond yield in Japan rose by 9 basis points to 3.79%, while the 40-year government bond yield briefly climbed by 11 basis points to 4.02%, both near the historical highs reached in January. Meanwhile, short-term government bond yields have been falling along with global peers due to concerns that a war with Iran could weaken global economic growth. Mari Iwashita, an interest rate strategist at Nomura Securities, said, "The market is worried about stagflation. With the uncertain situation in the Middle East and oil price outlook, there is still room for the yields on ultra-long-term government bonds to rise." Japan is one of the major economies most severely affected by the turmoil in the Middle East, with over 90% of its oil imports coming from the region. Investors are also assessing how this war will impact the Bank of Japan's interest rate hike path, as the central bank left open the possibility of taking action in April during its most recent meeting.