FX.co ★ Japan 10-Year Yield Hits Fresh 27-Year High

In post-holiday trading on Tuesday, the yield on Japan's 10-year government bond surged to approximately 2.14%, reaching its highest point since 1999. This increase comes amid speculation that Prime Minister Sanae Takaichi might dissolve parliament as soon as next month, contributing to political uncertainty. Takaichi is anticipated to capitalize on her strong public support to promote expansionary fiscal policies. The expectation of increased government expenditure has driven Japanese bond yields upward, indicating mounting concerns regarding the country's fiscal stability. On the monetary front, opinions remain divided about the timing of the Bank of Japan's upcoming interest rate increase, due to recent economic data presenting a mixed scenario. However, Bank of Japan Governor Kazuo Ueda has reaffirmed that the central bank will persist with rate hikes if economic and price developments align with projections.