Japanese Government Bonds Rally, Yields Tumble as Iran Strikes Spur Haven Demand

Reuters

11:02 JST, March 2, 2026

TOKYO, March 2 (Reuters) – Japanese government bonds jumped on Monday, driving yields sharply lower, as investors responded to military strikes by the U.S. and Israel that resulted in the death of Iran’s leader.

The benchmark 10-year JGB yield JP10YTN=JBTC fell 3.5 basis points (bps) to 2.075% in early trading. Yields move inversely to bond prices.

Israel launched a new wave of strikes on Tehran on Sunday and Iran responded with more missile barrages, a day after the killing of Supreme Leader Ali Khamenei pitched the Middle East and the global economy into deepening uncertainty.

U.S. and Israeli strikes, and Iranian retaliation, sent shockwaves worldwide through sectors from shipping to air travel to oil, amid warnings of rising energy costs and disruption to business in the Gulf region.

“Financial markets typically see an initial risk-off reaction followed by a reversal. However, the assassination of a nation’s leader this time could lead to prolonged repercussions,” Ataru Okumura, a senior strategist at SMBC Nikko Securities, said in a report.

“With rising crude prices and an expanding trade deficit driving yen weakness, and the potential for fiscal stimulus to counteract declining purchasing power, the JGB market faces the risk of increasing upward pressure on long-term and ultra-long-term yields,” he added.

The 20-year JGB yield JP20YTN=JBTC slid 3 bps to 2.895%. Other tenors had yet to trade.