Japan bond yields rise as US-Iran tensions fuel inflation concerns

TOKYO, July 16 (Reuters) - Japanese government bond (JGB) yields rose on Thursday as escalating U.S.-Iran tensions drove oil prices higher, fuelling inflation concerns and adding to persistent worries about Japan's fiscal health.

Here are a few details:

• The benchmark 10-year JGB yield JP10YTN=JBTC rose 0.5 basis point (bp) to 2.690%. Yields move inversely to bond prices.
• Oil prices rose for a fourth consecutive session after a new wave of U.S. strikes on Iranian military installations fuelled fears of renewed full-scale conflict and supply disruptions in the Strait of Hormuz. O/R
• The 30-year yield JP30YTN=JBTC added 5 bps to 3.805%. The 20-year JGB yield JP20YTN=JBTC climbed 1.5 bps to 3.55%, pulling back from an earlier rise of 3 basis points.
• Japanese Prime Minister Sanae Takaichi said on Wednesday that she saw no link between her government's draft economic blueprint and a recent rout in the JGB market.
• "The government has recently been taking steps to respond to rising interest rates, but there still appears to be some distance between the issues the market is concerned about and the government's own perception of the situation," Keisuke Tsuruta, senior bond strategist at Mitsubishi UFJ Morgan Stanley Securities, said in a note.
• "Lingering concerns over fiscal expansion and increased JGB issuance are likely to keep market participants cautious," Tsuruta added.
• The 2-year yield JP2YTN=JBTC, which is most sensitive to Bank of Japan policy rates, increased 0.5 bp to 1.435%. The 5-year yield JP5YTN=JBTC rose 0.5 bp to 1.94%.
• U.S. Treasury yields declined overnight after data showed the Producer Price Index for final demand dropped 0.3% last month, below the estimate of economists. US/
• U.S. Federal Reserve Chairman Kevin Warsh brushed aside a view that massive investment on AI is inflationary on Wednesday, a day after saying the central bank had "no tolerance for persistently elevated inflation."