◇Bond Market Opening Futures Continue to Decline Amid Stalled U.S.-Iran Peace Negotiations

◇Bond Market Opens Lower; Futures Extend Decline Amid Stalled U.S.-Iran Peace Talks In the domestic bond market early on the morning of the 27th, futures prices extended their decline. The key June contract opened at ¥130.63, down 20 yen from the previous day. Concerns over the stalled peace negotiations between the United States and Iran caused New York crude oil futures to rise on the 26th, strengthening expectations of higher interest rates. With the U.S. long-term interest rates having risen (and bond prices having fallen) the previous day, selling dominated the domestic bond futures market. In New York on the 26th, the yield on the benchmark U.S. 10-year Treasury note, which serves as an indicator for U.S. long-term interest rates, closed at 4.41%, up 0.08% from the previous day. Iran rejected the peace plan proposed by the United States and counterproposed five conditions to the U.S. President Trump posted on his social media, stating, “It is better to get serious before it is too late,” and views that peace negotiations between Iran and the United States could drag on have grown. Views that negotiations toward a ceasefire between the United States and Iran are stalling caused New York crude oil futures to rise to the $95 per barrel level on the 26th at one point. Amid speculation that rising oil prices could pressure inflation, potentially prompting a shift toward rate hikes by the Federal Reserve, expectations of higher interest rates have strengthened as this also serves as a factor supporting an early rate hike by the Bank of Japan. After the initial wave of selling subsided, bond futures prices dipped to ¥130.67 before stabilizing. On the 26th, President Trump announced that he would suspend military attacks on Iran’s power plants until April 6. The grace period, which had been set to expire on the 27th, was extended by ten days, and during morning trading Japan time on the 27th, the rise in New York crude oil futures eased, prompting some buying in domestic bond futures. In the cash bond market, new issuance transactions have not been concluded for any maturities. In the short-term money market, trading in the June contract for the Tokyo Overnight Average Rate (TONA) futures on the Osaka Exchange remains unsettled. 〔Nikkei QUICK News (NQN)〕