
Japan bond yields hit multi-decade highs as fiscal fears mount ahead of election
Yields on the 10-year instrument climbed to 1.599%, the highest since 2008, data from LSEG showed. Yields on the 30-year JGB also rose to a record high of 3.21%, while Japan's 20-year government bond yields spiked to their highest level since 1999.
"Japan's long yields and super-long yields are currently rising due to expectations of fiscal expansion after the Upper House election coming up next week," said Ken Matsumoto, Japan macro strategist at Credit Agricole CIB.
A sizable number of Japanese politicians and parties are actively discussing consumption tax cuts ahead of the upper house election set to take place Sunday.
Japan Prime Minister Shigeru Ishiba has maintained that he will not resort to tax cuts funded by more debt issuance, although opposition parties are calling for tax cuts and more spending, which could lead to more debt.
This political uncertainty is creating doubt over whether Japan's government will stick to fiscal discipline, said Vishnu Varathan, Mizuho Securities' head of macro research for Asia ex-Japan.
Japan has one of the world's highest levels of public debt relative to the size of its economy. While the government has flagged the need for more fiscal discipline, it relies heavily on issuing new debt to fund its obligations. Tax revenues alone are insufficient to cover the government's expenses.
"The most recent trigger is the election. People are concerned about the election because the politicians are talking about consumption tax cuts, and tax cuts of any sort in Japan is suicidal," said Amir Anvarzadeh, Japan equity market strategist at Asymmetric Advisors, who added that tax cuts would be dire given the fiscal situation that Japan is facing.
"This is why the bond vigilantes are out. And they're saying: we need more yield to invest in the bond market. So there's a shorting [going on] in the JGB market," he told CNBC.
Aside from the upcoming election, there are underlying factors at play that could bring forward the Bank of Japan's next rate hike. While still at elevated levels, Tokyo's inflation eased to 3.1% year on year in June, slower than the 3.6% in May.
"This could prompt the BOJ to revise its inflation forecast upward, potentially accelerating the timeline for its next rate hike," said Carlos Casanova, senior economist for Asia at Union Bancaire Privée.
On top of that, supply-demand imbalances in the Japanese bond markets could become more pronounced, especially as life insurers have less capacity to absorb additional supply, said Masahiko Loo, senior fixed income strategist at State Street Investment Management.
In June, the Bank of Japan said it would slow the pace of its government bond purchase reductions starting April next year, and kept its benchmark interest rate steady at 0.5% as economic risks mount. The BOJ reiterated plans to trim its monthly Japanese government bond purchases by roughly 400 billion yen ($2.76 billion) each quarter to about 3 trillion yen till March 2026, in line with guidance set last year.
Hashtags

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles


CNBC
7 minutes ago
- CNBC
Dollar climbs after Trump announces trade deal with EU
The dollar rose against major peers on Monday after the United States and the EU struck a framework trade pact, the latest in a flurry of deals to avert a global trade war, with investors also looking to this week's U.S. and Japanese central bank meetings. Meeting in Scotland on Sunday, U.S. President Donald Trump and European Commission President Ursula von der Leyen said the deal provided for an import tariff of 15% on EU goods, half the rate Trump had threatened from Aug. 1. That follows last week's U.S. agreement with Japan, while top U.S. and Chinese economic officials will resume talks in Stockholm on Monday aiming to extend a truce by three months and keep sharply higher tariffs at bay. The euro was last at $1.1693, down 0.4% on the day, reversing an initial knee-jerk rise in Asia trade as investors' focus shifted to what an easing in global trade tensions meant for the dollar overall. "The mood music on U.S. trade negotiations has been a little brighter following agreements with Japan and the EU," said Paul Mackel, global head of FX research at HSBC. "If more 'trade deals' are reached, this could help to reduce this source of policy uncertainty that has weighed against the dollar, at least for now. It could also see other factors such as relative yields becoming more influential." The dollar tumbled sharply earlier this year, particularly against the euro, as fears dramatically higher tariffs on trade with most of its major partners would hurt the U.S. economy caused investors to consider shifting out of U.S. assets. Normally the gap between yields on government bonds is a major factor for currency moves, but at present the euro is meaningfully higher than the gap between U.S. and euro zone yields would imply. The euro was also last down slightly on the yen and sterling, having hit a one-year high on the Japanese currency, and a two-year high on sterling at the start of trade. The dollar was stronger elsewhere, up 0.15% on the yen at 147.83, while the pound was down 0.13% at $1.3428. As concerns subside about the economic fallout from punishing tariffs, investor attention is shifting to corporate earnings and central bank meetings in the United States and Japan in the next few days. Both the Fed and the Bank of Japan are expected to hold rates steady at policy meetings this week, but traders will watch subsequent comments to gauge the timing of the next moves. Investors will also be watching to see Trump's reaction to the Fed's decision. The U.S. president has been putting the Fed under heavy pressure to make significant rate cuts, and Trump appeared close to trying to fire Powell last week, but backed off with a nod to the market disruption that would likely follow. In cryptocurrencies, ethereum jumped 1.7% and reached as high as $3,940.25, the most since December 2024.
Yahoo
34 minutes ago
- Yahoo
KKR Launches Tender Offer for Topcon
TOKYO, July 28, 2025--(BUSINESS WIRE)--KKR, a leading global investment firm, announced today that it will launch its tender offer ("Tender Offer") for the common shares and share acquisition rights, etc. of Topcon Corporation ("Topcon" or the "Company"; TSE stock code 7732). The Tender Offer will be made through TK Co., Ltd. ("Offeror"), an entity owned by the investment funds managed by KKR. The Tender Offer will commence on July 29, 2025 and will run until September 9, 2025. The Offeror will commence the Tender Offer to acquire all outstanding common shares and share acquisition rights (excluding treasury shares held by Topcon) with a tender offer price of JPY 3,300 per common share and JPY 193,400 per 7th Series Share Acquisition Right.1 Topcon is a global leader in the manufacturing of technology, leveraging its strengths in optical technology and precision measurement technology since its founding. Topcon is expanding its business globally with its unique DX solutions that combine advanced technologies such as IoT platforms and AI. Topcon is pursuing its long-term vision leading up to its 100th anniversary in 2032, and the Company has been implementing its "Mid-Term Management Plan 2025" covering the fiscal years 2023–2025. Under this plan, Topcon has pursued sustainable business growth and improved profitability by deepening its orientation towards customers, and as the next step, the Company aims to evolve into "New Topcon 2.0," a business structure that will further accelerate the competitiveness of the Topcon Group. KKR is making this investment predominantly from its Asian Fund IV. Topcon President and CEO, Takashi Eto, has agreed to tender his shares into the Tender Offer. Following the completion of the Tender Offer, Mr. Eto and funds managed by JIC Capital, Ltd. will invest in KKR-managed investment vehicles that will own Topcon. This series of transactions, including the Tender Offer, constitutes a management buyout. Additionally, funds managed by ValueAct Capital, a major shareholder of Topcon, have also agreed to tender shares in the Tender Offer and invest in KKR-managed investment vehicles that will own Topcon. For more details regarding the announcement, please refer to the full text of the release issued by the Offeror today titled, "Notice Regarding the Commencement of Tender Offer for the Shares of Topcon Corporation (Securities Code: 7732) by TK Co., Ltd. as part of MBO Implementation." Forward-looking Statements This press release should be read in conjunction with the release issued by the Offeror today titled "Notice Regarding the Commencement of Tender Offer for the Shares of Topcon Corporation (Securities Code: 7732) by TK Co., Ltd. as part of MBO Implementation." The purpose of this press release is to publicly announce the Tender Offer and it has not been prepared for the purpose of soliciting an offer to sell or purchase in the Tender Offer. When making an application to tender, please be sure to read the Tender Offer Explanatory Statement for the Tender Offer and make your own decision as a shareholder or share acquisition right holder. This press release does not constitute, either in whole or in part, a solicitation of an offer to sell or purchase any securities, and the existence of this press release (or any part thereof) or its distribution shall not be construed as a basis for any agreement regarding the Tender Offer, nor shall it be relied upon in concluding an agreement regarding the Tender Offer. The Tender Offer will be conducted in compliance with the procedures and information disclosure standards set forth in Japanese law, and those procedures and standards are not always the same as the procedures and information disclosure standards in the U.S. In particular, neither Sections 13(e) or 14(d) of the U.S. Securities Exchange Act of 1934 (as amended; the same shall apply hereinafter) or the rules under these sections apply to the Tender Offer; and therefore the Tender Offer is not conducted in accordance with those procedures and standards. In addition, because the Offeror is a corporation incorporated outside the U.S., it may be difficult to exercise rights or demands against it that can be asserted based on U.S. securities laws. It also may be impossible to initiate an action against a corporation that is based outside of the U.S. or its officers in a court outside of the U.S. on the grounds of a violation of U.S. securities-related laws. Furthermore, there is no guarantee that a corporation that is based outside of the U.S. or its affiliates may be compelled to submit themselves to the jurisdiction of a U.S. court. Unless otherwise specified, all procedures relating to the Tender Offer are to be conducted entirely in Japanese. All or a part of the documentation relating to the Tender Offer will be prepared in English; however, if there is any discrepancy between the English-language documents and the Japanese-language documents, the Japanese-language documents shall prevail. This press release includes statements that fall under "forward-looking statements" as defined in Section 27A of the U.S. Securities Act of 1933 (as amended) and Section 21E of the Securities Exchange Act of 1934. Due to known or unknown risks, uncertainties or other factors, actual results may differ materially from the predictions indicated by the statements that are implicitly or explicitly forward-looking statements. Neither the Offeror nor any of its affiliates guarantee that the predictions indicated by the statements that are implicitly or expressly forward-looking statements will materialize. The forward-looking statements in this press release were prepared based on information held by the Offeror as of today, and the Offeror and its affiliates shall not be obliged to amend or revise such statements to reflect future events or circumstances, except as required by laws and regulations. The Offeror, the financial advisors of the Offeror and the Company, and the tender offer agent (and their respective affiliates) may purchase the common shares and share acquisition rights, etc. of the Company, by means other than the Tender Offer, or conduct an act aimed at such purchases, for their own account or for their client's accounts, including in the scope of their ordinary business, to the extent permitted under financial instrument exchange-related laws and regulations, and any other applicable laws and regulations in Japan, in accordance with the requirements of Rule 14e-5(b) of the U.S. Securities Exchange Act of 1934 during the Tender Offer period. Such purchases may be conducted at the market price through market transactions or at a price determined by negotiations off-market. In the event that information regarding such purchases is disclosed in Japan, such information will also be disclosed on the English website of the person conducting such purchases (or by any other method of public disclosure). If a shareholder exercises its right to demand the purchase of shares of less than one unit in accordance with the Companies Act, the Company may buy back its own shares during the Tender Offer period in accordance with the procedures required by laws and regulations. About KKR KKR is a leading global investment firm that offers alternative asset management as well as capital markets and insurance solutions. KKR aims to generate attractive investment returns by following a patient and disciplined investment approach, employing world-class people, and supporting growth in its portfolio companies and communities. KKR sponsors investment funds that invest in private equity, credit and real assets and has strategic partners that manage hedge funds. KKR's insurance subsidiaries offer retirement, life and reinsurance products under the management of Global Atlantic Financial Group. References to KKR's investments may include the activities of its sponsored funds and insurance subsidiaries. For additional information about KKR & Co. Inc. (NYSE: KKR), please visit KKR's website at For additional information about Global Atlantic Financial Group, please visit Global Atlantic Financial Group's website at 1 7th Series Share Acquisition Rights issued pursuant to a resolution of the Company's Board of Directors held on June 25, 2021 (exercise period is from April 1, 2024 to March 31, 2029) View source version on Contacts Media Contacts Wei Jun Ong+65 6922 Samuel Brustad+81 90 7094
Yahoo
an hour ago
- Yahoo
Oppenheimer Lifts S&P 500 Target to Call Third Year of 20% Gains
(Bloomberg) — Progress in trade negotiations will take the S&P 500 (^GSPC) to a third consecutive year of 20% gains, according to Oppenheimer Asset Management, a feat unseen since the late 1990s. The High Costs of Trump's 'Big Beautiful' New Car Loan Deduction Can This Bridge Ease the Troubled US-Canadian Relationship? Budapest's Most Historic Site Gets a Controversial Rebuild Trump Administration Sues NYC Over Sanctuary City Policy Chief investment strategist John Stoltzfus raised his year-end target for the US benchmark to 7,100 points from 5,950, the highest among a panel of strategists tracked by Bloomberg. The new forecast implies an 11% upside from Friday's close. 'Progress on trade negotiations removes an uncertainty that had weighed on our market outlook,' Stoltzfus wrote in a note. He also lifted his 2025 earnings estimate for S&P 500 firms to $275 per share, 3% higher than the average analyst forecast. He reinstated his previous price target after cutting it in April post a negative market reaction to so-called 'Liberation Day.' Meanwhile, Morgan Stanley strategists led by Michael Wilson reiterated that the bull case for the S&P 500 is solidifying. US stocks have rallied to record highs as the US administration struck a series of trade deals ahead of the Aug. 1 deadline, including with Japan and the European Union, setting a broad 15% duty on imports. Several exporters in Asia, including Indonesia and the Philippines, have negotiated reciprocal rates between 15% to 20%. Washington's talks also continue with a number of countries including Switzerland, South Korea and Taiwan. Meanwhile, the US and China are expected to extend their tariff truce by another three months. Oppenheimer's new profit estimates imply further valuation expansion for the benchmark to 25.8 times forward price-to-earnings ratio, compared with 22.5 currently. The strategists noted that corporate revenue and earnings growth in the past two quarters surprised to the upside, while results for the earnings season currently underway are showing 84% of companies are exceeding analyst consensus expectations. —With assistance from Jessica Menton. Burning Man Is Burning Through Cash It's Not Just Tokyo and Kyoto: Tourists Descend on Rural Japan Elon Musk's Empire Is Creaking Under the Strain of Elon Musk Confessions of a Laptop Farmer: How an American Helped North Korea's Wild Remote Worker Scheme Dude! They Killed Colbert! ©2025 Bloomberg L.P. Sign up for the Yahoo Finance Morning Brief By subscribing, you are agreeing to Yahoo's Terms and Privacy Policy Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data