Japan’s 10-year government bond yield climbed toward 1.6% on Wednesday, reaching its highest level since late 2008 amid growing expectations of expanded fiscal spending ahead of the Upper House election on July 20. Markets are increasingly pricing in the possibility of fresh stimulus measures, including a potential consumption tax cut, as policymakers move to support economic growth.
The yield surge came despite the Ministry of Finance scaling back issuances of super-long bonds, indicating strong upward pressure on shorter-term rates. Investors are also awaiting upcoming trade and inflation data for signals on how US tariff threats may be affecting Japan’s economy. Additionally, Japanese yields tracked US Treasury yields higher after the latest US consumer inflation data led traders to dial back expectations for near-term Federal Reserve rate cuts.
