Japan 10-Year Yield Rises as Snap Election Looms

Japan’s 10-year government bond yield rose about 3 basis points to around 2.27% on Monday as investors prepared for the Feb. 8 snap lower house election, where Prime Minister Sanae Takaichi’s ruling party is expected to gain seats and push for expansionary fiscal policies. Japanese government bonds and the yen had come under pressure last month amid bets on fiscal stimulus, with talks of tax cuts expected to further strain already stretched government finances. Meanwhile, a summary of opinions from the Bank of Japan’s January meeting highlighted growing concern over the need to raise interest rates in a timely fashion, as members monitored the impact of a weak yen on inflation. The summary suggests the possibility of a faster pace of rate hikes than the market consensus of roughly one move every six months following December’s increase.