Japan’s 10-year government bond yield fell about 2 basis points to 2.26% on Tuesday, retreating from three-week highs as investors reassessed the country’s policy outlook following Prime Minister Sanae Takaichi’s landslide election victory. Markets are factoring in Takaichi’s pledge that her stimulus measures will not further strain public finances, while her supermajority is seen as providing greater policy clarity and reducing the risk of adverse fiscal scenarios. Her ruling coalition secured a two-thirds majority in the lower house, giving her a strong mandate to pursue higher spending and tax cuts. On Monday, she reiterated her commitment to suspend the 8% sales tax on food for two years.
