Yields on Japan's benchmark government bonds (JGBs) have surged to a 29-year high, with the 10-year yield rising 5.5 basis points to 2.490% following the collapse of U.S.-Iran peace talks. This geopolitical tension has led to a spike in oil prices, raising inflation fears among investors. The five-year yield also increased by 4 basis points to a record 1.900%. Analysts, including Keisuke Tsuruta from Mitsubishi UFJ Morgan Stanley Securities, warn that the ongoing instability in the Middle East could continue to exert upward pressure on JGB yields. Meanwhile, the Bank of Japan's Deputy Governor Ryozo Himino is expected to address the potential for an interest rate hike at an upcoming event, with market expectations indicating a 57% chance of such a move this month, as indicated by interest rate swaps data. The situation remains fluid, with analysts closely monitoring developments.