Japan’s 10-year government bond yield rose above 1.97% on Thursday, reaching its highest level since 2007 as concerns over the country’s deteriorating fiscal outlook, fueled by Prime Minister Sanae Takaichi’s spending plans, continued to push domestic yields higher. Takaichi stated on Wednesday that Japan must pursue proactive fiscal measures to support growth and increase tax revenues. The Bank of Japan also begins a two-day policy meeting, where it is widely expected to raise its policy rate by 25 basis points to 0.75%, as elevated food costs keep inflation above the central bank’s 2% target. Investors will closely watch Governor Kazuo Ueda’s post-meeting comments for guidance on the policy trajectory for next year, amid speculation that rates could reach 1% by July.
