Japan's Nikkei share average extended its gains from last week to end at a record high on Monday, as a weaker yen pushed automakers' stocks higher.

Analysts note that the U.S. Treasury yields have declined while Japanese government bond yields have stayed largely unchanged, narrowing the U.S.-Japan 10-year yield gap. Under normal conditions, this would have supported the yen.

They’re behind the curve so they are going to be hiking and they need to get their inflation problem under control,” Bessent told Bloomberg TV, comments that stood in contrast to the position of Bank of Japan governor Kazuo Ueda.

The Bank of Japan will likely be raising interest rates as it is behind the curve in dealing with the risk of inflation, U.S. Treasury Secretary Scott Bessent told Bloomberg Television, in his most explicit comment on Japan's monetary policy.

JPY is no longer the most attractive funding currency, and the currency's strength may not necessarily lead to broad-based risk aversion, one expert said.