FX.co ★ Japan 10-Year Yield Jumps to 27-Year High

Japan's 10-year government bond yield increased by approximately 6 basis points to reach 2.24% on Monday, marking its highest point since 1999. This rise is being driven by speculation about potential interest rate hikes from the Bank of Japan (BOJ) and anticipated increased fiscal spending under Prime Minister Sanae Takaichi. Although the BOJ is anticipated to maintain its policy rate at 0.75% this week, market participants are closely watching for any shifts come June. Recently, BOJ Governor Kazuo Ueda reaffirmed the central bank's willingness to raise rates if economic and price trends meet projected outcomes. Additionally, markets are evaluating the possibility of a snap election next month, which Prime Minister Takaichi might call to solidify her position and promote her expansionary fiscal strategies. There are rising concerns about debt-financed expenditures amidst reports that she is considering a campaign promise to suspend the 8% sales tax on food to alleviate growing food costs in Japan.