Japan’s 10-year government bond yield climbed above 1.8% on Thursday, reaching its highest levels since 2008 as investors braced for the announcement of Prime Minister Sanae Takaichi’s stimulus package, which is expected to exceed 20 trillion yen. Lawmakers from the ruling Liberal Democratic Party even proposed a supplementary budget topping 25 trillion yen to fund the plan, well above last year’s 13.9 trillion yen extra budget. The massive spending plan has raised concerns about Japan’s fiscal health, fueling a ‘Sell Japan’ trade that pushed the yen and bond prices lower, though equities held firm as Nvidia’s strong earnings eased worries about an AI bubble. Meanwhile, Bank of Japan Governor Kazuo Ueda told the prime minister that the central bank is gradually raising rates to steer inflation toward its 2% target while supporting sustainable growth.
