JGB futures dipped 0.12 yen in Tokyo morning trading as oil prices surged, reflecting heightened concerns about inflation risks at the Bank of Japan. Analysts point to the Bank of Japan's March meeting where policymakers debated the threat of rising oil prices accelerating inflation, with SMBC Nikko Securities' Lisa Mochizuki noting the yield curve has bear-steepened. April rate hike remains the base case, though inflation worries could ease if the BOJ prioritizes price stability. The 10-year JGB futures settled at 130.22 yen.

This shift signals market skepticism about the BOJ's ability to control inflation without tightening policy, potentially impacting Japanese government bond valuations and corporate borrowing costs. The development underscores the delicate balance between energy prices and monetary policy in Tokyo, with implications for global investors tracking Japanese markets.