Japan’s 10-year government bond yield hovered around 2.79% on Monday, staying close to its highest level since October 1996 amid mounting concern over rising fiscal spending and heavier government borrowing. The bond market has faced sustained selling pressure since the government announced a broad, long-term economic strategy with large-scale spending commitments that may require additional debt issuance, while simultaneously calling on the Bank of Japan to maintain a supportive monetary stance for its growth agenda.
Under the plan, Japan aims to mobilize more than ¥370 trillion ($2.29 trillion) in combined public and private investment through fiscal 2040 to strengthen key strategic industries. At the same time, the yen’s weakness near 40-year lows has intensified pressure on the BOJ to raise interest rates further, adding to the upward pressure on Japanese government bond yields.
