Been watching the Japanese bond market pretty closely lately, and there's definitely something interesting happening with the yields. A strategist from Mitsui Sumitomo Trust just threw out a prediction that caught my attention - he's expecting the Japanese 10 year bond yield to keep climbing, potentially hitting around 2.7% sometime this year. That's a pretty significant move from where we're sitting right now.

What's driving this? A few things converging at once. First, there's the inflation concern that's been weighing on everyone's mind. Then you've got the fiscal management uncertainties under the current government adding to the pressure. But maybe most importantly, the market is pricing in expectations that the Bank of Japan will continue hiking rates. That's the real kicker here - if the BoJ stays committed to tightening, Japanese bond yields are likely to follow suit.

Interestingly, we just saw yields across the board dip on Wednesday when oil supply concerns eased off a bit. The benchmark 10-year Japanese government bond yield actually dropped 4 basis points down to 2.225%. But honestly, that looks like a temporary pullback in the bigger picture. The structural pressures on Japan's 10 year bond yield seem pretty entrenched at this point.

The thing is, if we do see that 2.7% level hit, it would represent a pretty meaningful shift in the Japanese bond market. Worth keeping an eye on how this plays out over the coming months.