Japan’s 10-year government bond yield held steady around 2.25% on Wednesday, remaining range-bound for the past two weeks as investors prepared for this weekend’s snap lower house election. Prime Minister Sanae Takaichi’s ruling LDP is expected to gain more seats in the national election as she seeks voter backing for increased spending, tax cuts and a new security strategy. Japanese bonds and the yen have come under pressure since Takaichi took office as she pushes for expansionary fiscal policies, raising concerns about Japan’s fiscal outlook on fears of debt-funded spending. Meanwhile, an auction of Japan’s 10-year bonds this week showed softer demand on election jitters. The sale produced an average yield of 2.249%, sharply higher than the 2.095% recorded at the previous auction. The bid-to-cover ratio stood at 3.02, below both last month’s level and the 12-month average.
