Fresh debt issuance to fund a supplementary budget sends Japan’s 10-year bond yield to its highest level since 1996.
Japan’s 10-year government bond yield surged to 4.2%, its highest since October 1996, after reports confirmed plans for fresh debt issuance to finance a supplementary budget. The yield climbed 10 basis points to 2.8% on Monday amid concerns over strained public finances.
The supplementary budget aims to offset rising energy costs linked to the Iran conflict, which has driven fuel prices higher. Japan’s debt levels were already elevated before the Middle East crisis escalated, adding pressure on bond markets.
Prime Minister Takaichi is expected to formally announce the extra budget, which will include new debt to cushion households from the economic impact of the oil shock.