FX.co ★ Japan 10-Year Yield Eases as Policy Outlook Mulled

Japan’s 10-year government bond yield slipped about 2 basis points to 2.26% on Tuesday, pulling back from a three-week high as investors reassessed the policy outlook following Prime Minister Sanae Takaichi’s landslide election victory. Markets are responding to Takaichi’s pledge that her stimulus measures will not further burden public finances, while her commanding majority is seen as enhancing policy visibility and lowering the risk of unfavorable fiscal outcomes. Her ruling coalition secured a two-thirds majority in the lower house, giving her a strong mandate to push ahead with higher spending and tax cuts. On Monday, she reaffirmed her plan to suspend the 8% sales tax on food for two years.