Japan must be mindful of credit rating downgrade risk, bank lobby head says
Japanese government bond (JGB) yields rose to multi-decade highs this week on market expectations that a strong performance by opposition parties calling for big spending and tax cuts could lead to an increase in Japan's already huge debt-pile.
Junichi Hanzawa, chairman of the Japanese Bankers Association, said the recent rise in bond yields likely reflected investors' anxiety over the market outlook.
"If debt expansion runs out of control, it could become difficult for the government to smoothly sell bonds in the market" as the balance of Japan's public debt is already extremely high, Hanzawa told a news conference on Thursday.
"If this happens, we must be mindful of the risk of a JGB credit rating downgrade," he said.
Recent media polls showed Prime Minister Shigeru Ishiba's ruling coalition could lose its majority in the upper house election.
Such an outcome could force Ishiba to abandon his hawkish fiscal tilt, boost spending and heed opposition calls to cut Japan's sales tax rate, analysts say.
Moody's Ratings has said an increase in tax cut pressure could be negative for Japan's rating depending on the size and duration of the cut. It rates Japan A1, the fifth-highest level.
A credit rating downgrade could trigger a triple selling of JGBs, yen and Japanese stocks - and boost the cost of dollar funding for Japanese banks.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
BBC News
2 hours ago
- BBC News
Wetin cause tension between Thailand and Cambodia
Clash between Thailand and Commbodia military for one border wey di two kontris dey drag, don kill at least 12 pipo, Thai authority tok. Dis fight don carry di border argument, wey don dey occur for more dan 100 years between di two South Asia neighbours enta anoda level. Most of di people wey die na civilians from three of Thailand provinces according to Thai army. Di army also report say many oda pipo wunjure. But Cambodia neva tok weda dem to get casualties. On Thursday, di two sides exchange gunfire wit each side claiming say na di oda first find trouble. Di gbas gbos quickly enta anoda level as Thailand accuse Cambodia say e fire rockets, and diafore, dem fire air strikes on Cambodia military targets. Now Thailand don close dia border wit Cambodia, while Cambodia reduce dia relationship wit Thailand, wey e accuse say dem use "excess force." Di two don ask dia kontri pipo wey dey live near di border make dem pack comot. Thailand evacuate 40,000 pipo comot go safe place. "E serious no be small. We dey middle of evacuation," Sutian Phiwchan, on area pesin for di Ban Dan district for Thailand Buriram province near Cambodia border, tell BBC. Thai authorities say na 11 civilians, including one pikin wey dey eight years and anoda one wey dey 15 year, plus one military pesin. Cambodia and Thailand dey tok dia own version of wetin happun. Thailand claim say Cambodia military na dem first send drone to spy dia troop for border. Cambodia for dia own tok say Thai sojas cause fight wen dem break one agreement wen dem carry dem sef go near Khmer-Hindu temple wey dey near di border. Wetin dey cause fight? Dis gbas gbos between Cambodia and Thailand begin more dan one hundred years, wen French colonial masters divide di border for di two kontris. Tins officially enta anoda level of kasala for 2008, wen Cambodia try to register one 11 century temple wey dey for di area wey dem dey drag land, as World Heritage Site. Dis move cause serious protest for Thailand. Di two side don dey clash for years and soldiers and civilians don die for both sides. Dis lates tension begin gada momentum for May afta dem kill one Cambodia soldier for one clash. For di past two months, di two kontris impose border restriction on di oda. Cambodia stop to import tins like fruits and vegetables, plus stop importing electricity and internet service. Both kontris don also increase di number of soldiers wey dem get for di border. Thailand acting premier Phumtham Wechayachai say di kasala wey dem get wit Cambodia dey "delicate", and dem must to address am wit care and according to international law. Cambodian Prime Minister Hun Manet im kontri want make dem solve dis mata peacefully - but add say im "no get choice" but to "respond wit armed force against armed aggression". Serious exchange of fire between di two kontris bin reduce sharply. But while e dey be like say di current fight fight fit no blow up turn to fill war, di two side currently lack leaders wey get enough strength and confidence to pull back from dis confrontation.
BBC News
3 hours ago
- BBC News
Cumberland Council approves expansion of local bus services
A major expansion of bus services has been approved, aimed at targeting areas where routes are currently limited or commercially Council said the move follows talks with residents and stakeholders to understand local travel by £3.5m in government funding through the Bus Services Improvement Plan (BSIP), the delivery of the proposed new services are subject to operators submitting a tender to run them, the local authority plans were backed by councillors at a Highways and Transport Strategic Board earlier. Labour councillor Denise Rollo said: "This is the next step in building a better future for public transport in Cumberland, one that directly reflects what our communities have told us they want."While not all services may attract tenders, given market constraints such as vehicle and driver availability, Cumberland Council is committed to securing the best possible outcomes for residents within the available funding." The proposed new or expanded services include:Carlisle to Anthorn - Addition of peak journeys and a new Sunday serviceKirkbride to Carlisle - The reinstatement of a previous service including enhanced links for Cargo, Houghton Rockcliffe and Currock Community CentreWhitehaven to Ravenglass - New serviceCarlisle to Cockermouth - Upgrade to hourly serviceCockermouth-Lillyhall-Distington - West Cumberland Hospital- New serviceCarlisle to Hadrian's Wall - New serviceCockermouth Town Buses - Return of the local town serviceBootle to Millom via Ravenglass - New serviceCockermouth to Mayport - Service enhancements that include peak journeys and a new Maryport and Dearham town serviceWhitehaven Town Loop - New north eastern loopCarlisle-Longtown-Penton - Expanded rural covergeCarlisle to Durranhill/Carleton - New route service Locke Road Surgery and GarlandsWetheral-Carlisle-Dalston - Greater frequencyFrizington to Cockermouth/Workington - Return of previous serviceThe plans also include the continuation of services introduced in November 2024, including:Silloth to MaryportMaryport-Egremont-ThornhillMaryport-Cleator Moor-FrizingtonWorkington to Carlisle Follow BBC Cumbria on X, Facebook, Nextdoor and Instagram.
The Independent
4 hours ago
- The Independent
Trump promised to back Detroit automakers - his deal with Japan has them shaking in their boots
General Motors, Ford and Stellantis - the big three U.S. automakers - pushed back against the Trump administration after President Donald Trump announced a trade deal with Japan that would lower tariffs on vehicles made overseas and hurt the American car companies. Earlier this week, the president said he had signed the 'largest' trade deal in history with Japan, which would include a 15 percent tariff on imported cars – significantly lower than the 25 percent tariff on other imported vehicles. Trump announced the 25 percent tariff on cars made overseas earlier this year, and many of Detroit's companies manufacture cars in Mexico and Canada, which would make them subject to the 25 percent tariff. Higher tariffs likely mean higher costs for consumers, which could lead people to turn to the cheaper Japan-made models. 'Any deal that charges a lower tariff for Japanese imports with virtually no U.S. content than the tariff imposed on North American built vehicles with high U.S. content is a bad deal for U.S. industry and U.S. auto workers,' Matt Blunt, the head of the American Automotive Policy Council, which represents the big three Detroit auotmakers, said in a statement. Blunt said American Automakers were still reviewing the terms of the agreement. During the campaign, Trump visited Detroit and touted the American car industry, promising to 'revolutionize' it. However, shortly after taking the White House, he quickly imposed tariffs on all cars made overseas. General Motors warned just this week that it expects a $4 to $5 billion impact from Trump's tariffs. Auto Drive America, a group that represents U.S. operations of foreign vehicle makers, praised the Japan deal while also calling for Trump to reach similar agreements with the European Union, South Korea, Canada and Mexico. 'We share President Trump's vision to make the U.S. the worldwide center of automotive production, and our member companies need stability in order to create an environment where we can maintain our competitive edge both in the U.S. and on the global stage,' Auto Drive America said. While the deal with Japan will impose lower tariffs, Trump said it will also open market access to the U.S. U.S. auto manufacturers have long struggled to infiltrate the Japanese market, in part because smaller cars that drive on the left side of the road are in much more demand – the type that the U.S. does not typically make. Kush Desai, a spokesperson for the White House, said, 'No president has taken a greater interest in restoring the American auto industry's dominance than President Trump, and his Administration is working closely with the auto industry to achieve this goal.' 'President Trump's trade agenda has already secured historic market access to Japan and Indonesia for Made in America cars with more America First trade deals to come,' Desai added. 'The Administration's domestic policy agenda – from rapid deregulation to the pro-growth tax cuts of The One Big Beautiful Bill – will further boost our auto industry's competitiveness on the world stage and Make American Automakers Great Again.' Hoping to stimulate U.S. manufacturing, the president imposed lofty automotive tariffs earlier this year. Automakers initially raised concerns with the 25 percent tariff in addition to other levies such as those on steel and aluminum. After, Trump offered U.S. automakers some relief through a complicated discount program. Two of the big three Detroit automakers appear to have suffered setbacks. General Motors said Tuesday its second-quarter earnings plummeted 35 percent, compared to the same quarter last year. It also reported a $1 billion loss in second-quarter profits. Stellantis, which makes Chryslers, Jeeps, and more, said it expects to see nearly $350 million in losses in the first two quarters of the year, in part due to tariffs. Around 60 percent of car parts are imported, even if the car is finally assembled in the U.S. Every single 2025 model car sold in the U.S. had at least 15 percent of its parts from a country outside of North America. Trump has threatened to hike tariffs on the U.S.'s largest trading partners, Mexico and Canada, to 30 and 35 percent, respectively.
