Japan’s 10-year government bond yield fell to around 2.49% in post-holiday trading on Thursday, easing back from 29-year highs as oil prices fell sharply on signs that the US and Iran were closing in on an agreement to end the war and potentially reopen the Strait of Hormuz. That reduces pressure on Japan’s economy which relies heavily on oil imports from the Middle East, while also providing the Bank of Japan greater flexibility in normalizing monetary policy. Meanwhile, minutes from the BOJ’s March meeting indicated that policymakers saw scope for additional rate hikes if the Iran-related energy shock persisted and continued to drive broader inflationary pressures. Elsewhere, the yen strengthened again on what markets suspected to be another round of intervention from Tokyo. Currency moves have taken on added significance for policymakers, given the impact of a weaker yen on imported inflation and its direct effect on household purchasing power.