As rumours that Prime Minister Sanae Takaichi could dissolve parliament and hold elections emerged, the yield on 30-year bonds increased by 12 basis points to 3.52%, while 10-year bond futures dropped by 71 ticks.
Takaichi’s expansionary fiscal policy would probably be reinforced by a greater mandate, which would put pressure on government bonds and the currency.
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During a bilateral discussion in Washington, US Treasury Secretary Scott Bessent and Japan’s Finance Minister Satsuki Katayama expressed concerns about the weakening yen, which caused the yen to rise as much as 0.2% to 157.90 per dollar.
Following media speculation about a quick election, the value of the Japanese yen fell below 158 per dollar to its lowest point in a year. The currency gained just 0.3% versus the US dollar last year, below most of its Group of 10 counterparts.
Japanese officials have increased their cautions against speculative trading as a result of its decline, and markets are preparing for potential government assistance for the currency.
(Edited by : Juviraj Anchil)