31/03/2026

BIZ & FINANCE TUESDAY | MAR 31, 2026

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Global bonds set for bigget monthly losses in over a year

pressures from the Middle East war. In the strongest warning yet of yen-buying intervention, Japan’s top currency diplomat Atsushi Mimura said yesterday authorities may need to take “decisive” steps if speculative moves persist in the currency market. “We are hearing that speculative moves are increasing in the currency market, in addition to the crude futures market. “If this situation continues, it may be time to take decisive measures,“ Mimura told reporters. The remark marked an escalation from past verbal warnings as it was the first time Mimura, who oversees Japan’s currency policy, used the term “decisive” – language traders typically read as a signal of authorities’ readiness to intervene. Markets have been rattled this month after the Iran war effectively shut the Strait of Hormuz, a chokepoint for about a fifth of global oil and gas flows, driving up crude oil prices and demand for the safe haven dollar. The yen bore the brunt and slid past the psychologically important 160-per-dollar level to its weakest since July 2024, when Japan last intervened to prop up the currency. Soaring oil prices from the Middle East conflict add to inflationary pressures from the weak yen, which has been a political headache for policymakers by pushing up import costs. Separately, Bank of Japan Governor Kazuo Ueda said the central bank would closely watch yen moves as they affect the economy and prices, suggesting inflationary pressures from a weak currency could justify raising interest rates in the coming months. “Currency market moves are obviously among factors that hugely affect economic and price developments,“ Ueda told Parliament yesterday. “We will guide policy appropriately by scrutinising how currency moves could affect the SINGAPORE: Global government bonds slid towards their biggest monthly losses in more than a year as investors weighed the risks from a prolonged war in the Middle East on inflation and growth. However, some relief for short-dated debt yesterday suggested markets were shifting focus towards the economic fallout of a conflict showing few signs of de-escalation as it entered a second month. The two-year US Treasury yield – which moves inversely to its price – was set for a monthly rise of roughly 50 basis points (bps), its largest since October 2024, although it retreated roughly 4 basis points in Asia to 3.8770%. Australia’s three-year yield was up about 50 bps for the month, the most in 17 months, despite easing more than 9 bps yesterday to 4.715%. Japan’s two-year government bond yield was up 12.5 bps for March, after dipping 2 bps to 1.36%. Yesterday’s respite followed a climb to multi-month peaks for short-end bond yields in March. “Now that the reality is sort of

o Protracted Mideast conflict shifts market’s focus to growth fallout sinking in that perhaps the oil price might stay high for a bit longer, given that it’s hard to see an end to the war anytime soon, the growth impact is starting to become more of a focus,” said Moh Siong Sim, a strategist at OCBC. “The buzzword here is stagflation,” he said. “Initial focus was on inflation.

months. Japan’s 24.5 bps rise in its 10-year yield would mark the steepest advance since December. Chinese government bonds have held up relatively well compared to peers as investors bet the world’s second-largest economy will be better insulated from the oil shock due to its ample crude stockpiles, dominance in green energy and subdued consumer price inflation. Ten-year Chinese government bonds are up only slightly this month, while two-year bonds have climbed more than 10 bps, set for their largest monthly rise since December 2024. – Reuters

was set for a monthly gain of roughly 51 bps, its largest since October 2024, while the benchmark 10-year yield was headed for a roughly 43 bps rise. Eugene Leow, senior rates strategist at DBS, said the “marked deterioration” in bids at the recent two-year and five-year US Treasury auctions underscores the “significant stresses” facing the market. “Investors are clearly on the sidelines amidst uncertainties over how the Iranian conflict will play out,” he said. In Australia, 10-year yields are up 42 bps for the month, the most in 17

Now the ‘stag’ bit is moving into the picture, and that’s perhaps explained why short-end bond yields have come off.” Oil prices remain firmly above US$100 per barrel, leading investors to bet on higher-for-longer global interest rates. That dynamic has overshadowed the traditional safe-haven allure of sovereign debt. Investors currently wager the Federal Reserve will leave rates on hold this year, while the European Central Bank and Bank of England are seen raising rates at least twice over the remainder of 2026. The five-year US Treasury yield

Japan steps up yen intervention threats, signals rate-hike chance TOKYO: Japan stepped up yen intervention threats and signalled that further falls in the currency could justify a near-term interest rate hike, as policymakers grow increasingly concerned about inflationary

A woman walks past a screen displaying the exchange rate between yen and US dollar outside a brokerage in Tokyo. – REUTERSPIC

inflation gauge and revised output gap showing Japan running above capacity for a 15th straight quarter. The summary of the BOJ’s March meeting, as well as last week’s release of a hawkish inflation, output gap and neutral rate estimates, suggests the bank is teeing up for its next rate rise, said Benjamin Shatil, an economist at JPMorgan Securities. “While the global risk environment remains fragile, and could affect the timing of the BOJ’s next move, we continue to pencil in a hike at the April meeting,” he said. – Reuters

short-term policy rate at an “appropriate pace” to avoid bond yields from overshooting, signalling its resolve to continue with steady rate hikes. The BOJ ended a decade-long, massive stimulus in 2024 and raised rates including in December, when it hiked its short-term policy rate to a 30-year high of 0.75%, on the view Japan was making progress in durably achieving its 2% inflation target. The central bank released last week several indices that help justify further rate hikes, including a new

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likelihood of achieving our growth and price forecasts, as well as risks,“ he said, keeping alive the chance of a rate hike as soon as next month. Ueda’s remarks highlight growing concern within the BOJ over the chance it could fall behind the curve in addressing the risk of too-high inflation, as high fuel costs hit an economy already experiencing years of steady price and wage increases. While the BOJ kept rates steady in March, its policymakers debated further rate hikes with some flagging the chance of steady or faster-than-expected increases, the

yesterday. Broadening cost pressures from rising oil prices could tip Japan into stagflation where the economy slumps and prices increase simultaneously, one member was quoted as saying, adding the BOJ may need to tighten policy if yen declines intensify. Concern over stagflation hit Japan’s Nikkei stock average and pushed the benchmark 10-year Japanese government bond (JGB) yield to a 27-year high yesterday. Ueda said the BOJ must raise its