Overview
- Prime Minister Sanae Takaichi set a February 8 snap election and is campaigning on stimulus and tax relief, including a two-year suspension of the 8% food sales tax.
- Long-dated JGBs repriced sharply with 40-year yields topping 4% for the first time and 20- and 30-year yields hitting records, while the 10-year approached 2.4%.
- Demand faltered at a 20-year auction as dealers reported a buyer vacuum, prompting government officials to say they are closely watching long-term rate moves.
- The selloff spilled into global markets with U.S. 30-year Treasury yields near 4.9% and 10-year yields around 4.29%, as European long bonds also weakened.
- Analysts warn a looser fiscal stance colliding with gradual BOJ normalization could lift JGB term premiums and spur Japanese capital to favor domestic bonds over foreign debt.