FX.co ★ Japan 10-Year Yield Hits Near 3-Decade High

Japan's 10-year government bond yield surged past 2.3% on Tuesday, reaching its highest point in almost three decades. This increase arises from concerns surrounding Prime Minister Sanae Takaichi's proposal to reduce the sales tax on food to zero. Investors are worried about the potential increase in fiscal risk since the government has yet to clarify how it intends to compensate for the lost revenue. Furthermore, Takaichi declared plans to dissolve parliament at week's end and hold a general election on February 8. Her party is anticipated to win additional seats, facilitating the advancement of fiscal expansion and other policies. Meanwhile, the market is intently focused on the upcoming Bank of Japan policy meeting. Rates are expected to remain steady following December's increase, but investors will be closely monitoring BOJ Governor Kazuo Ueda for any hawkish signals that might suggest a potential interest rate hike in June.