Japan’s 10-year government bond yield slipped to around 1.67% in post-holiday trade on Tuesday, easing from over 17-year highs as rising political uncertainty spurred demand for safe-haven assets. On Friday, Japan’s Komeito party announced its withdrawal from the ruling coalition led by the Liberal Democratic Party, deepening doubts over Sanae Takaichi’s policy agenda and complicating her path to the premiership. Meanwhile, Finance Minister Katsunobu Kato said Japan’s current situation differs from the Abenomics era of aggressive stimulus, noting that inflation, rather than deflation, is now the main concern. Kato also cautioned against one-sided and rapid currency moves, stressing that exchange rates should remain stable and reflect economic fundamentals.
