Japan 10-year JGB yield rises amid Strait of Hormuz tensions

Japan’s 10-year JGB yield climbed 1.0 basis point to 2.480%, while the Polymarket contract for the Bank of Japan decreasing interest rates after the April 2026 meeting holds at 0.1% YES, unchanged from a week ago.

The US naval blockade of the Strait of Hormuz has pushed Japanese bond yields higher by raising inflation expectations, which makes a BoJ rate cut less likely. The rate-cut contract has not moved from 0.1% YES in a week.

Oil prices nearing $100/barrel from the Hormuz disruption feed into the crude oil price by end of June market, where the probability of crude reaching $90 by June 30 rises on supply-disruption risk. That market remains thin with no recent trades, which means traders are still sizing up the potential impact.

The BoJ rate decision market is barely active: actual USDC traded is $19 per day, and only $82 is needed to shift the odds by 5 points. The largest recent move was less than a basis point. This low liquidity reflects how few traders see a realistic path to a rate cut.

At 0.1%, buying YES pays $1 if the BoJ surprises with a cut. For that bet to make sense, you’d need to expect a sudden reversal in geopolitical conditions or unexpected economic data that forces the BoJ’s hand.

Watch for the upcoming Bank of Japan meeting and any US or UN announcements on the Middle East situation, both of which could move these contracts.

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