Japan's bond yields hit 1997 highs as Iran war triggers 'doom loop'

Japan's 10-year government bond yield just spiked to 2.49% — the highest since 1997 — while the 40-year hit 4% for the first time ever as Trump's naval blockade of the Strait of Hormuz sends oil to $90 per barrel. The Bank of Japan faces an impossible choice: raise rates to defend the yen (now at 160 per dollar) and risk a debt crisis, or keep rates low and watch currency collapse accelerate. With Japan's debt-to-GDP ratio above 236%, any policy response threatens to destabilise either currency or bond markets. The Nikkei already fell 12% in a single day from a modest BOJ signal, and Goldman Sachs warns this energy shock represents "the largest supply disruption in history."