JGBs are mixed in early Tokyo trade, but may track overnight price gains in U.S. Treasurys, as the two markets tend to move in tandem. JGB prices could also be buoyed by the ongoing decline in crude oil prices, which usually alleviates inflationary pressure in Japan and might reduce the urgency of the BOJ to raise rates quickly. NAB senior economist Taylor Nugent said in commentary that markets looked to signs of progress towards a narrow deal to reopen the Strait of Hormuz. The two-year JGB yield is unchanged at 1.565% and the 10-year JGB yield is 1.5 bps lower at 2.830%. Investors remain cautious as geopolitical tensions in the Middle East continue to weigh on sentiment, while the decline in energy costs provides a potential tailwind for Japanese government bond prices. The interplay between global yield movements and domestic inflation expectations will likely remain a key driver of JGB pricing in the session ahead.

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