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
Reuters
2 minutes ago
- Reuters
South Korea to prepare mutually agreeable trade package as US tariff deadline looms
SEOUL, July 26 (Reuters) - South Korea will prepare a trade package that is mutually agreeable with the United States ahead of minister-level meetings planned next week and a U.S. tariff-pause deadline of August 1, the presidential office said on Saturday. The package will include shipbuilding cooperation, a sector of high interest to U.S. Commerce Secretary Howard Lutnick, who discussed the matter with South Korea's Industry Minister Kim Jung-kwan on Friday, it said in a statement. South Korea's Finance Minister Koo Yun-cheol and Foreign Minister Cho Hyun will also hold meetings with U.S. Treasury Secretary Scott Bessent and State Secretary Marco Rubio, respectively, next week.
The Sun
35 minutes ago
- The Sun
How YOU could retire at 35 with £1million in the bank using the FIRE method – & why the number 25 is key
IT'S everyone's dream to retire early and travel the world, but it seems impossible to achieve. Meet the FIRE savers and top finance experts who explain how YOU could retire decades earlier, by following a seven-step plan - and why the number 25 is key. 3 3 The FIRE savings method stands for "Financial Independence Retire Early". Put simply, it means drastically cutting back your spending and ploughing your savings into the stock market. The aim is to start saving as aggressively as you can, as soon as you can, so you can retire as early as possible and long before the age at which you can start claiming your state pension. The method can be traced back to America in the early 90s and provides a blueprint as to how you can save like crazy in order to retire in your 40s or 50s - or even your 30s. It's sparked a huge number of followers willing to live on a shoestring to achieve this retirement dream - #retireearly has 413k posts on Instagram, while #FIREmovement has 174k posts. But the FIRE dream is controversial, as it relies on your investments going up - and that could be a risky strategy, as they could just as easily go down. It also goes against a lot of traditional money advice, so make sure you really consider your options before embarking on it. But for one couple, Katie and Alan, the method has allowed them to give up work at the age of 35 and 40, and they now travel the world jetting off across Asia, America and Mexico. Kate says: "People just assume retirement is an age, but it's actually a monetary target." However, the FIRE dream has become even trickier to achieve due to rising inflation and high interest rates, with the price of everyday goods soaring and borrowing being more expensive. But it's still possible - and we explain how you can do it. What is FIRE - and why the number 25 is key The idea behind FIRE is that you save and invest a high proportion of your earnings at a young age into the stock market. You also need to pay off all your debt, including your mortgage, as soon as you can. There's a critical number you'll need to remember when saving - which is the number 25. This is because you should aim to save around 25 times your annual spending (which is your outgoings, living costs, bills, and disposable cash). When you hit the target, FIRE savers say you will have enough to live off and quit your job. FIRE rules state that you need to stash away 50 per cent of your income every month in order to hit that 25 target as quickly as possible. Investment platform Hargreaves Lansdown has crunched the numbers on how much you need to save in order to hit the golden 25 number. The average amount that households spend per year is £27,216, according to the latest data from the Office for National Statistics. That means that you would need to save £680,400 in order to be able to retire. Sarah Coles from Hargreaves Lansdown said: "Because you are only taking the income earned from your investments and leaving the remaining underlying investment untouched, it should technically last forever. "But bear in mind that there will be some years when you get more income and some when you get less, so you need savings you can call on when the income isn't enough. "Otherwise, you will eat into the capital – and once you do that, you will gradually erode your retirement pot." If your income after tax was £30,000, then you would need to save a huge £1,250 a month in order to hit that target within 24 years. If your income after tax was £35,000 and your annual spend was £30,000 - which could be the case for larger families - then you would need to save a total of £750,000. Saving half of your income - £1,458 a month - would take you 23 years to have enough to retire on. If you're saving as a couple and your income after tax was a combined £45,000, and your annual spend was £40,000, you would need to save £1million. Saving half of your combined income - £1,875 a month - would take you 24 years. The faster you can save this amount, the earlier you can retire - so how do you do it? The key to saving enough money, according to the FIRE movement, is by investing it in the stock market. Some FIRE savers do have pensions, but they can be restrictive. That's because you can only access your private pension at 55 years old (or 57 from 2028). While saving into a pension is really important because of the tax benefits it gives you, FIRE savers say too much of your cash should not be locked away until later life. This is a risky strategy, so you need to start early to ensure it works, says Laith Khalaf from the investment platform AJ Bell. "FIRE highlights the value of early contributions into the stock market," he said. "The younger you are when you start saving or when you invest, the more time you have for that money to grow and become a sizeable pot. That's a really valuable lesson that FIRE saving can give you." 3 How do you invest in the stock market? THE key idea of FIRE is to invest in the stock market - so how do you do it? The first thing to do is check if you are in a position to be able to invest. Experts say you should have three to six months' worth of wages in a savings account you can access before you begin investing. You can start with just £1, but how much you can make depends on how much you invest and where. The first thing to do is to open a stocks and shares Isa. You can save £20,000 a year into an Isa. Any gains - which is the difference between what you paid for your investment, and what it is worth now - are tax-free. Stocks and shares ISAs are offered by several major banks including NatWest, HSBC, Barclays and Lloyds Bank, and investment platforms like AJ Bell, Hargreaves Lansdown or Fidelity. When you open your account, you can either choose between a selection of ready-made investment funds or you can pick your own. Ready-made investment funds are usually popular among beginner investors, and will range from low to high risk to help you meet different financial goals. They include a mix of assets, including company shares, bonds, property and gold. Some providers will ask you to complete a short quiz when you sign up for a stocks and shares ISA to help you decide which of these ready-made plans to choose. FIRE savers may want to take on more risk than usual in order to make higher returns - but remember that the losses are bigger if your investment doesn't work out. For example, if you chose the low-risk "defensive" fund at Barclays Bank then 66 per cent of your money will be held in cash, 16 per cent will be kept in bonds and 18 per cent in shares. This has an estimated return of 2.11 per cent after 10 years, so if you invested £100 a month over this time period, you would be left with £13,470. But if you chose the higher risk "adventurous" fund, just two per cent of it would be held in cash, nine per cent would be kept in bonds and 89% would be invested in shares. The predicted rate of return is 7.33 per cent over 10 years, so £100 a month over a decade would leave you with £17,834. If you're picking your own stocks and shares to invest in, research the companies you are considering backing. Use sites like Investegate to read the latest reports and accounts. Look at a company's 'fundamentals' - which means checking things like whether it is profitable, if sales and customer numbers are growing, and making sure it doesn't have too much debt. Watch out for fees, which can eat into the returns you make. For example, NatWest charges a fee of 0.55 per cent of the value of your investment. That works out at 55p for every £100 of your investments. In comparison, Barclays charges a 0.25 per cent fee, which works out at 25p for every £100 you invest. Try and save on high investment fees by shopping around for a platform which charges lower fees. The Financial Conduct Authority (FCA) says investors usually pay an average annual fee of 2.4 per cent for financial advice. So if you had £250,000 in investments, switching to a platform which charges 1.4 per cent could save you £2,500 a year in fees. Mind out for any nasty exit penalties or set-up fees. Beware of the risks. You must be prepared to lose it all - so only invest money you can afford to lose. You must be able to lock away your cash for five years to allow your pot to recover if its been hit by ups and downs of the stock market. It's usually better to drip feed money into your investments instead of putting down a big chunk of money in one go. Choose a lean or fat retirement diet plan A good way of planning for how much to save in your retirement is to save for either a "lean" or a "fat" retirement. Lean financial independence (Lean FI) and Fat financial independence (Fat FI) refer to how much of your spending is covered by your investments. Lean FI means your basic expenses are covered (rent/mortgage, bills, transport) but you'll be left with no money for holidays and luxuries. Fat FI means all your expenses are covered, and you can live a more lavish lifestyle by going on trips and taking up hobbies. It all comes back to the golden 25 number - and calculating your annual spending. If your lean expenses are £20k, you need £20k multiplied by 25, which equals £500k. If your "fat" expenses are £100k, you need £100k multiplied by 25, which is £2.5million. While Lean FIRE gets you there faster, Fat FIRE gives you more when you arrive. The 4% rule you NEED to know Once you've saved enough, the tricky thing is to know how to manage your money so you don't run out. Experts say the trick is to withdraw four per cent from your savings each year. This is the amount that you should be safely able to withdraw over a 30-year retirement without running out of money. The idea is that by the next time you need to take money out, your pot should have replenished, but that assumes that your investments continue to grow as normal. A FIRE saver's retirement could last even longer than that, so make a plan based on how long you expect to be in retirement. This is especially important because we are all living for longer, so use the Office for National Statistics' life expectancy tool, which will give you a rough guideline on how long you can expect to live, depending on your age. For example, the average life expectancy of a 40-year-old female is 87 - so for someone in this position retiring now, a sensible idea would be to budget for a 47 year retirement. 'I'm a money expert - how to make FIRE saving possible on any salary' CHARLOTTE Kennedy, Chartered Financial Planner at Rathbones, gives her tips on how to make FIRE saving possible on any salary: FIRE exists on a broad spectrum - from modest lifestyle adjustments that reduce unnecessary expenditure, to extreme sacrifices that can severely dent one's quality of life. The key is striking a balance. You don't have to forgo all present-day comforts to gain future financial freedom. Sensible money management and intentional spending can go a long way. Make a budget and stick to it by monitoring your bank account frequently. Avoiding lifestyle creep - where spending habits increase in line with income growth - can also help. You don't need to squirrel away 70% of your income to reach financial independence. Setting clear, achievable long-term goals, spending within your means, and investing consistently, while giving your money time to grow through the power of compound interest, can help get you there. Ultimately, FIRE shouldn't be about austerity for the sake of it. It's about taking control of your finances and making deliberate choices today, so you have more freedom tomorrow. The half your age rule The "half your age" rule is another handy way to boost your FIRE savings. It suggests that when you start saving for retirement, you should aim to contribute a percentage of your pre-tax salary equal to half your age. So, for example, if you start saving at age 22, aim to contribute 11 per cent of your salary. If you start at 30, aim for 15%. Factor your pension contributions into this calculation as well. Under the current auto-enrolment rules, workers must pay at least 8% of their qualifying earnings into their workplace pension every year. At least 3% of this comes from employers' contributions. If you have a private pension, like a self-invested personal pension, for example, factor in your contributions to this savings pot too. How YOU can retire at 35 following 7 steps FIRE saving can be tricky to stick to because you need to make a lot of sacrifices in order to save as much as possible. Luckily, there's a seven-step guide that husband and wife duo and successful FIRE savers Katie and Alan Donegan have created to help others retire early too. The couple retired in 2019, when Katie was 35 and Alan was 40, after saving £1million by investing in the stock market. Their seven steps are: Create a gap between what you earn and what you spend. This is how much you have leftover to save for your retirement. Log into your bank account frequently to monitor your finances and prevent overspending. Can you increase your income? Sell stuff you have lying around the house, rent the spare room or ask for pay rise. Reduce your spending - cancel Amazon Prime, Netflix and any subscriptions you don't use. Make lunch at home. Only buy what you need. Before you invest, build an emergency fund of £1,000. Pay off high interest debt such as credit and store cards. Invest in a low fee, simple global index fund like the Vanguard FTSE Global All Cap Index Fund. Do it in a tax efficient way (stocks and shares ISA or SIPP). Don't forget your pension. It's sensible to see if you can increase contributions into your workplace pension scheme. 'We saved £1million in 10 years using the FIRE method - we've retired to travel the world' HUSBAND and wife Katie and Alan Donegan saved £1million in just 10 years by following the FIRE savings method. They retired when Katie was 35 and Alan was 40, and now travel all over the world from Rio de Janeiro to California. "You don't have to be stuck in a job you don't like," said Katie. "That is what truly inspired us. "People just assume retirement is an age, but it's actually a monetary target." The couple got into the FIRE savings method in 2009. At this point, Katie, now 40, worked as an actuary, while Alan, 45, was a landscape gardener. Both were fed up of the daily grind, and couldn't stomach the idea of working into their 60s, so they started researching how they could retire early. That's when they began to strip back their spending and start piling money into the stock market. When they first started FIRE, they earned about £50,000 between them, but this soon rose to £150,000 as their careers progressed, which helped to fast-track their savings. Katie said: 'Usually, when people earn more their spending goes up too. 'Ours only went up a tiny amount. We worked hard to push up our earnings and keep expenses down. 'We never upgraded from the small two-bed flat we bought. 'We downgraded to a smaller, second-hand car. 'We never turned the heating on. We wore extra layers, used hot water bottles and made it a bit of a game. 'We saved over £40,000 in ten years simply by taking our own salads to work each day.' Alan invested the cash using ready-made funds, where the hard work is done for you by an expert. "Choose a platform such as Vanguard Asset Management or Interactive Investor and invest in one simple index fund. It's surprisingly easy and simple to do." As the couple do not have children, saving for an early retirement was much easier. By 2019, they had hit the target of saving 25 times their annual spend - which was £1million. Since then, they've managed to invest an extra £265,00 - £182,000 of which was from the sale of their property and £83,000 from the sale of Alan's business. Thanks to the power of compound interest, their pot now stands at nearly £2.2million. This supersized savings pot is held in global index funds, one of the most diverse kinds of portfolios where your money is invested in thousands of companies across 49 countries. They have crunched the numbers and believe that if they withdraw £40,000 a year to live off, this is enough money to last them for their entire retirement. They say this is more than enough money to be able to travel across Asia, America and Mexico. The couple now rent places on Airbnb or stay in hotels, depending on their location. This has included a five-star suit in Bogota, Columbia which costs just £42 a night. Other locations have included West Palm beach in Florida for £112 a night or Poland for three months last year where they paid £38 a night. 'I retired 28 years before the state average," said Alan. "I clawed back 28 years of my life. I couldn't think of a better use of cash. 'If you're in your 20s, 30s, 40s or even 50s, you can make it to being a millionaire.' How ANYONE can adopt the FIRE rules to improve their finances Before embarking on FIRE saving, really assess if it's right for you. Laith adds: "A lot of FIRE saving can be a bit joyless. "It requires sacrifices now, sometimes very high sacrifices, as the idea is that you put away a lot of money. Then, in retirement, you live quite frugally. "There's no point in your life where you are enjoying affluence. That might perfectly fit some, but it's not for everybody." If you feel like FIRE is too difficult to achieve, you can still follow the principles of the method to boost your savings. You're not in a position to save half of your income, but investing just £25 a month can help grow your savings to a healthy size. If you invested £25 into the FTSE 100, for example, which is the collective name for the 100 largest UK companies by value, you could turn £25 into £4,465 after 10 years. Over 20 years, that pot would grow to £12,609. That's assuming that your investment grows at a rate of five per cent a year after charges. A great principle of FIRE is to pay off your debts as quickly as possible. By focusing on paying off your debts, you end up saving yourself a lot of money in interest repayments. For example, if you were focusing on paying off a £150,000 mortgage debt and making £200 worth of over-payments a month, you'd clear your debt seven years and six months early, saving you £33,130. Before making over-payments, check if your lender lets you do this penalty-free. Most let you make over-payments worth 10 per cent of your outstanding mortgage debt per year. The downsides of FIRE - beware of the risks FIRE is a tempting way to get rich quick and retire early - but experts have warned about the risks of this savings method It's important to check how retiring early could affect your finances. Retiring early could mean that you won't pay enough in National Insurance contributions to get the full state pension. National Insurance is a tax that workers pay, and is used to calculate how much state pension you get. You need 35 years of NI contributions to get the maximum payment of £230.25 a week. You need at least 10 years of contributions to get any state pension at all. That means that if you could be putting your state pension payments at risk. You can pay to fill in gaps in your record. You may also lose vital benefits by retiring early. Some benefits can only be claimed if you are working, such as tax-free childcare and 30 hours of free childcare. Piling all your money into the stock market is a risky strategy. As we have seen recently, the stock market can dramatically fall. The American stock market saw its biggest drop since the start of the Covid pandemic after US President Donald Trump announced plans to introduce punitive tariffs on goods imported to the US from other countries. The UK's own stock market, the FTSE 100, fell by more than 10 per cent after the news. If a market crash happens early in your retirement, it could dramatically reduce your pot - and how long you can make it last for. This could leave you vulnerable to income shocks - so beware. You must be prepared to lose it all - so only invest money you can afford to lose.
The Guardian
41 minutes ago
- The Guardian
Cambodia calls for ‘immediate ceasefire' with Thailand as deadly clashes enter a third day
Cambodia wants an 'immediate ceasefire' with Thailand, the country's envoy to the United Nations has said, as fighting that has left 32 people dead continued for its third consecutive day Tens of thousands of people have been displaced by the clashes, which are the bloodiest in more than a decade, and have claimed 19 lives in Thailand and 13 in Cambodia. Cambodia's UN ambassador made the ceasefire call after an emergency meeting held behind closed doors late on Friday in New York. Cherdchai Chaivaivid, Thailand's envoy to the UN urged Cambodia to 'immediately cease all hostilities and acts of aggression, and resume dialogue in good faith'. A long-running border dispute between the two countries erupted into intense fighting on Thursday, with heavy artillery and airstrikes, prompting the UN Secretary-General to call for the 'utmost restraint'. Malaysia, which chairs the regional bloc that includes both countries, called for either side to stand down and offered to mediate. The US and China have also expressed concern over the developments. 'Cambodia asked for an immediate ceasefire – unconditionally – and we also call for the peaceful solution of the dispute,' Cambodia's UN ambassador Chhea Keo said after the UN meeting. On Saturday morning, the Cambodian ministry of national defence accused Thailand of firing five heavy artillery shells into multiple locations in Pursat Province, on the southern side of their shared border, saying it condemned such 'unprovoked and premeditated act of aggression'. Thailand accused Cambodia of initiating an attack in neighbouring Trat province, and said that Thai naval forces had successfully pushed back 'the incursion' by 05.40am. Cambodia and Thailand's border dispute dates back more than a century to disagreements over colonial-era maps. Tensions have been running high since May, when a Cambodian solider was killed a brief exchange of fire, but escalated further this week when Thai solders were injured by landmines, which Thai officials claimed had been freshly planted – an allegation Cambodia has denied. Thailand responded by recalling its ambassador to Cambodia, and saying it would expel Cambodia's envoy in Bangkok, and, on Thursday morning fighting erupted at multiple points along the border. Both sides blamed each other for opening fire first, and have accused the other side of violating international norms. In Thailand 19 people have been killed, including 13 civilians and six soldiers, while 29 soldiers and 30 civilians were wounded. In Cambodia, officials reported 12 further deaths, five soldiers and eight civilians, bringing its death toll to 13. More than 138,000 people have been evacuated from Thailand's border regions, its health ministry said, with families sheltering at temples, schools and at municipality centres. Cambodian authorities said more than 23,000 people have evacuated from areas near the border. Thailand's foreign ministry spokesperson Nikorndej Balankura told AFP that Bangkok was open to talks, possibly aided by Malaysia. 'We are ready, if Cambodia would like to settle this matter via diplomatic channels, bilaterally, or even through Malaysia, we are ready to do that. But so far we have not had any response,' Nikorndej told AFP, speaking before the UN meeting had been held. Earlier, acting Thai prime minister Phumtham Wechayachai had warned that if the situation escalated, 'it could develop into war.' 'For now, it remains limited to clashes,' he told reporters in Bangkok, adding that Thailand was taking action to 'protect our land and the sovereignty of our nation.' Both countries have traded blame over the clashes. Thailand accused Cambodia of targeting civilian infrastructure, including a hospital hit by shells and a petrol station hit by at least one rocket. Cambodia has accused Thailand of using cluster munitions. Dozens of kilometres in several areas of the 800km border are contested. Fighting previously broke out between 2008 and 2011, leaving at least 28 people dead and tens of thousands displaced. The latest dispute has been exacerbated by a feud that has broken out between the fathers of the prime ministers of Cambodia and Thailand. Hun Sen, an authoritarian ruler who handed power to his son Hun Manet in 2023, and Thailand's former populist leader Thaksin Shinawatra, whose daughter Paetongtarn Shinawatra became prime minister in 2024, both remain highly influential in their countries. They were once considered close friends but are now embroiled in a bitter dispute, trading insults, threats and counter claims on social media. Thaksin visited Ubon Ratchathani, in northeastern Thailand, on Saturday morning, and denied the families' feud was the cause of the clashes, according to local media reports. He condemned Cambodia's actions as 'appalling' and said attacks from the Thai side followed strict protocols and were targeted at military sites.
