FX.co ★ Japanese Yields Stabilize on Katayama Remarks

On Wednesday, Japan's 10-year government bond yield dipped just below 2.35%, following Finance Minister Satsuki Katayama's appeal for market participants to remain calm. This came in the wake of a selloff that had elevated yields to levels not seen in decades. The surge was triggered by Prime Minister Sanae Takaichi's proposal to reduce the 8% sales tax on food, which has sparked apprehension about Japan's fiscal situation, as there is uncertainty regarding how the government will offset the revenue shortfall. Concerns also lingered that a more significant downturn in the bond market might compel the Bank of Japan to step in with its unlimited bond-buying program. Investors are additionally preparing for a snap election set for February 8, as Takaichi aims to consolidate her authority and further her expansionary fiscal strategies. In other news, the BOJ is widely anticipated to maintain its policy rate at 0.75% later this week, following a 25-basis-point increase in December.