Fiscal Concerns Remain after Takaichi Vows to Win Market Trust

Tokyo, October 5 (Jiji Press) - Fiscal concerns linger in Japan despite Prime Minister Sanae Takaichi's pledge to regain market confidence during her parliamentary policy address on Monday. The yen's performance has been under scrutiny as bond yields surge. Investors are keen to see whether Takaichi's administration will back up her commitment to a "responsible and proactive" fiscal policy that strikes a balance between economic growth and fiscal sustainability.

The government is already working on its preliminary budget for fiscal 2027. "We will take a straightforward approach to enhance market confidence," Takaichi stated during the start of an extraordinary Diet session. She further pledged to communicate the outcomes of her policies to the public and market participants. Since taking office last October, financial markets have been closely observing the prime minister's statements and policy management.

Due to Takaichi's reserved approach towards Bank of Japan's potential rate hikes, as well as fears of higher government bond issuance under her expansionary fiscal policy, the benchmark 10-year government bond yield hit 3.115% on September 25, the highest level since August 1996.