Latest news with #Shigeru Ishiba
Yahoo
21 hours ago
- Business
- Yahoo
Japan Bond Rout Touches New Pain Point as 10-Year Yield Rises
(Bloomberg) -- Japan's long-term government debt yield touched the highest level since 2008, as a raft of election tax-cut pledges puts investors on edge and risks higher costs all around in the country. Why Did Cars Get So Hard to See Out Of? Advocates Fear US Agents Are Using 'Wellness Checks' on Children as a Prelude to Arrests LA Homelessness Drops for Second Year Tuesday's rise of 2.5 basis points in the 10-year yield — to 1.595% — while modest, is a reminder that it's not just bonds of 20 to 40 years that are under pressure, even if the most extreme moves have been in these super-long maturities. The uptick shows the increased vulnerability of Japan's bond market after its central bank started pulling back from massive purchases that placed a protective cushion around yields for more than a decade. An upper house election on Sunday that could see the ruling coalition lose its majority is further fueling concerns that the government will loosen its grip on its finances even more, adding to pressure on yields. 'The biggest story in Japan this week must be the spiking yields' that is playing up again, said Amir Anvarzadeh, Japan equity strategist at Asymmetric Advisors Pte. 'Bond vigilantes are finally focusing on Japan,' where debt to gross domestic product is elevated, a quarter of the annual budget is set aside for refinancing debt that was issued at lower rates, and politicians are talking about tax cuts to secure power, he said. Prime Minister Shigeru Ishiba's government is promising to ramp up spending through a familiar approach of cash handouts, while opposition parties are largely campaigning on much more expensive plans to lower the sales tax. The latest polls suggest the ruling coalition is in danger of losing its majority in the upper house, further complicating its ability to press ahead with policy and putting more pressure on it to cut taxes. If the upward movement in yields continues after the election, calls may increase for authorities to do more. Already, the Bank of Japan has announced plans to slow down its withdrawal from the market and the Finance Ministry has trimmed its issuance of debt at the super-long end. The government is closely monitoring market moves of Japan's sovereign debt, according to Economic Revitalization Minister Ryosei Akazawa, who added that fiscal concerns won't stop the government from making the necessary budget allocations to realize its economic goals. He expects the country's fiscal health to improve as a more growth-oriented economy emerges, projecting the kind of messaging bond vigilantes often jump on. The selloff in Japan's $7.7 trillion bond market is already spilling over into major debt markets, amplifying ructions driven by fears that governments around the world are spending more than they can afford. Japan's 20- and 30-year yields both climbed to their highest levels since 1999 on Tuesday. The 10-year bond yields are particularly watched because they are seen as having a direct impact on household and business spending through higher mortgage rates and other borrowing costs. Atsushi Takeda, chief economist at Itochu Research Institute, said businesses broadly don't take on debt in the super-long end, hence the rise in 10-year bond yields is something 'we must keep a close eye on.' Earlier spikes in yields in April and May slowed growth in loans by the nation's banks, hinting at the caution they generate for both borrowers and lenders. Average long-term loan rates among domestic banks in April hit the highest since 2009 at 1.428% before edging down in May. The latest gain in yields may push rates up again. The 10-year yield is being driven by instability in super-long bonds due to demand concerns and declining liquidity, said Takahiro Otsuka, senior fixed income strategist at Mitsubishi UFJ Morgan Stanley Securities Co. 'It can't be said with certainty that the 10-year yield will stop rising at around the 1.6% level.' Any runaway increase in this yield would be detrimental to Japan's finances, according to Mizuho Financial Group Inc.'s chief executive officer. If it goes beyond 3% or so, that would hurt the budget, according to Masahiro Kihara, CEO of Japan's third-biggest bank, who spoke in a Bloomberg Television interview. What Bloomberg Strategists say: 'The common thread between US, European and Japanese long-term debt is that fiscal policy is carrying more weight than monetary policy in terms of setting market yield genie is out of the bottle and not going back in any time soon.' — Mark Cranfield, MLIV Strategist. Read more on MLIV. 'The environment for selling bonds will continue,' said Tadashi Matsukawa, head of bond investments at PineBridge Investments Japan Co. 'Buybacks from the Ministry of Finance could be one of the key measures to stabilize yields.' For now, policymakers will likely try to play down the vulnerability of the market. Japan's Finance Minister Katsunobu Kato said on Monday that bond yields are decided by market participants, and he would refrain from commenting on specific moves. Bank of Japan Governor Kazuo Ueda has said the nation's super-long yields have a limited impact on the real economy compared to shorter-term debt. Developments will be carefully monitored, he said. Meanwhile, some market observers see the gains as a pre-election spike rather than a trend that threatens economic growth or the nation's government. The consensus among JGB investors is that any implementation of a consumption tax cut will be temporary and limited, said Ryutaro Kimura, a senior fixed-income strategist at AXA Investment Managers Japan Ltd. in Tokyo. 'Upward pressure on interest rates is likely to peak out once uncertainty over fiscal policy recedes after the election.' --With assistance from Yoshiaki Nohara, Masahiro Hidaka, Aya Wagatsuma, Gregory Turk and Paul Jackson. (Updates throughout with additional comments.) Thailand's Changing Cannabis Rules Leave Farmers in a Tough Spot The New Third Rail in Silicon Valley: Investing in Chinese AI 'Our Goal Is to Get Their Money': Inside a Firm Charged With Scamming Writers for Millions 'The Turbulence Is Brutal': Four Shark Tank Businesses on Tariffs Will Trade War Make South India the Next Manufacturing Hub? ©2025 Bloomberg L.P. 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Japan Times
a day ago
- Business
- Japan Times
With China and Trump, Japan defense report says world entering ‘new era of crisis'
The international community has entered 'a new era of crisis,' according to Japan's annual defense report released Tuesday, with China representing Tokyo's 'greatest strategic challenge' and U.S. President Donald Trump's policies expected to 'significantly impact' the Indo-Pacific region. The annual report, which was approved by the Cabinet at a meeting the same day, is packed with tough assessments of the regional security environment Japan faces, as well as a detailed description of progress it has made in strengthening its own defenses. 'The international community is facing its greatest challenge since the end of the war and has entered a new era of crisis,' the white paper says. 'The issues ... are particularly pronounced in the Indo-Pacific region, where Japan is located, and are likely to become even more serious in the future.' The report singles out China as 'the greatest strategic challenge Japan has ever faced' and says the global balance of power is dramatically shifting, with competition between nations becoming more apparent. 'In particular, competition between the United States and China is likely to intensify,' it says. Trump pushed that competition into overdrive in his first term, and has continued to do so during the first six months of his latest term. U.S. President Donald Trump holds a joint news conference with Prime Minister Shigeru Ishiba in the East Room of the White House in Washington in February. | REUTERS The white paper also mentions the second Trump White House's early focus on Ukraine, the Middle East and his administration's commitment to Asia while also alluding to the possibility of pronounced shifts in policy. 'U.S. actions will significantly impact the security environment in the Indo-Pacific region, where Japan is located, and will require continued attention,' it says. While Japan has welcomed Washington's pledged commitment to the region, reiterated by U.S. Secretary of Defense Pete Hegseth during a March visit to Tokyo, Trump has also been demanding that the American ally take on more of the burden for its defense in what he has said is their 'one-sided' alliance. Beyond a campaign of unilateral tariffs that threaten to throw regional economies into chaos, the Trump administration has also called for allies — including Japan — to boost defense spending to 5% of their gross domestic product. Japan has committed to a goal of spending 2% of its gross domestic product on defense, laying out a five-year, ¥43 trillion plan in 2022. According to the paper, some 61% of this plan has already been put into action, with defense-related spending in the fiscal year through March 2026 set to total ¥9.9 trillion ($68.4 billion), or 1.8% of GDP in line with 2022 budget standards — a figure that has Japan within striking distance of the 2% target. Moves by the Chinese military in the airspace and waters around Japan have been a driving factor in the push to spend more on defense. A Chinese J-15 fighter jet from the aircraft carrier Shandong makes "an unusual approach" to a Maritime Self-Defense Force P-3C patrol aircraft that was conducting surveillance above the Pacific Ocean on June 8. | DEFENSE MINISTRY / VIA AFP-JIJI The white paper notes that the Chinese military is 'stepping up their activities throughout areas surrounding Japan, including the East China Sea around the Senkaku Islands, the Sea of Japan and the western Pacific Ocean, beyond the so-called first-island chain and extending to the second-island chain.' It cites several recent incidents, including the China Coast Guard's deployment of a helicopter in Japan's territorial airspace around the Japanese-controlled, Chinese-claimed Senkakus in May. The white paper also noted a Chinese military aircraft's incursion into Japanese airspace last August and a Chinese aircraft carrier sailing close to Japan's territorial waters the following month — both firsts. Beijing has continued to chip away at precedent in recent months, dispatching both of its active aircraft carriers deep into the western Pacific last month and sending its warplanes near Japanese aircraft multiple times in recent weeks, moves that Tokyo said risked collisions. 'China's active military activities have the potential to seriously affect Japan's security, and this is of grave concern,' the paper says. The report also echoes concerns stated in last year's version about China's designs on self-ruled Taiwan, noting Beijing's ramped-up pace of military activities around the island. The possibility of a 'serious situation' akin to Russia's war in Ukraine occurring in East Asia 'cannot be ruled out,' it said, in a view widely seen as highlighting fears of a Chinese invasion of Taiwan. 'As the United States continues to make clear its stance of supporting Taiwan militarily, China — which regards the Taiwan issue as the 'core of its core interests' — is unlikely to compromise, and the conflict between the U.S. and China over the issue may become even more pronounced,' the paper notes. A sailor raises the Maritime Self-Defense Force ensign on board the MSDF's Ise helicopter destroyer as it docks at the international port in Manila on June 21. | AFP-JIJI Trump's predecessor, Joe Biden, repeatedly hinted that the U.S. would come to Taiwan's aid in the event of an invasion. Since taking office, however, Trump has largely avoided the issue — though the Pentagon is believed to pushing Japan to make clear the role it would play in the event of a U.S.-China conflict over Taiwan. Tokyo is widely seen as viewing any crisis over Taiwan as an existential crisis for Japan, as well. 'Stability in the situation surrounding Taiwan is important not only for the security of Japan, but also for the stability of the international community, and Japan must continue to monitor the situation with even greater vigilance,' the white paper says. The strong words about one of the most sensitive subjects in the Sino-Japanese relationship are sure to anger China, which calls Taiwan a renegade province that must be unified with the mainland — by force, if necessary. According to the report, Russia's military cooperation with China is another area of 'serious concern.' The partners have conducted joint bomber flights and naval voyages around the archipelago that Tokyo says 'are clearly intended as a demonstration of force against Japan.' Japanese soldiers with a mobile missile launcher that can hit ships more than 160 kilometers away at Camp Katsuren in Okinawa Prefecture on May 23 | Ko Sasaki / The New York Times Russia's growing military ties with North Korea — including Pyongyang's shipment of weapons and deployment of troops for use in the Ukraine conflict — was also noted as a key concern. In addition, the report said, 'there is a risk that Russia may transfer nuclear and missile-related technology to North Korea, which could have a long-term impact on the military balance in the Indo-Pacific.' North Korea was characterized as 'a more serious and imminent threat to Japan's security than ever before,' the white paper said, noting that the country possesses 'the capability to attack Japan by equipping ballistic missiles with nuclear weapons.' In order to tackle these challenges, as well as address any potential fallout from U.S. shifts under Trump, the white paper also concluded that Japan must also collaborate with 'like-minded countries ... in order to counter unilateral attempts to change the status quo by force or coercion.' 'It is extremely important to strengthen cooperation not only with allies, but also with as many countries as possible,' the report says.
Free Malaysia Today
a day ago
- Business
- Free Malaysia Today
Japan's ruling coalition seen losing upper house majority, polls show
Shigeru Ishiba faces pressure to keep 50 seats to maintain the ruling majority in the upper house. (AP pic) TOKYO : Japan's ruling coalition will likely lose its majority in the upper house election on July 20, media polls showed on Tuesday, heightening the risk of political instability at a time the country struggles to strike a trade deal with the US. Japanese bond yields soared as investors braced for the possible loss of fiscal hawk prime minister Shigeru Ishiba, which could strain the country's already frail finances. Ishiba's ruling Liberal Democratic Party (LDP) and its coalition partner Komeito will likely struggle to retain the 50 seats needed to defend its majority in the upper house of parliament, the Asahi newspaper said based on voter polls and nationwide reporting by its journalists. Japan's Jiji news agency also reported on Tuesday that the ruling coalition was struggling in the election campaign and could lose its majority in the upper house. Ishiba's administration has seen approval ratings slide as the rising cost of living, including the soaring price of Japan's staple rice, hits households. 'Ishiba's low approval ratings reflect voter dissatisfaction with the status quo,' David Boling, a director at consulting firm Eurasia Group, said in a research note, adding he sees a 60% chance of the ruling coalition losing its majority. The political uncertainty comes at a critical time for Japan, which must clinch a trade deal with Washington by the new Aug 1 deadline to avoid being slapped with 25% tariffs. Ishiba is arranging to meet US treasury secretary Scott Bessent on Friday during his visit to Japan to attend the US national day at the World Expo in Osaka, the Yomiuri newspaper reported. Japan's top government spokesperson said on Tuesday that Bessent's schedule was still being arranged. As darkening economic prospects and rising inflation hit households, Ishiba has pledged to deliver cash payouts to cushion the blow to households from rising living costs. But Ishiba has shunned opposition calls to cut Japan's sales tax rate. An election defeat may heighten the chance of a cut, some analysts say. It would also complicate the Bank of Japan's efforts to wean the economy off a decade-long, massive stimulus. The risk of looser fiscal policy pushed super-long Japanese government bond yields to record-high levels. 'If the ruling coalition loses a majority, markets will be on the lookout for clues on Ishiba's fate, the new government framework and its fiscal policy stance,' said Naoya Hasegawa, chief bond strategist at Okasan Securities.
Bloomberg
a day ago
- Business
- Bloomberg
Japan's Ruling Parties at Risk of Losing Upper House Majority
Japan's ruling Liberal Democratic Party and its junior coalition partner Komeito are at risk of losing its majority in the upper house in elections this Sunday, potentially weakening Prime Minister Shigeru Ishiba and his minority government's standing further amid ongoing trade negotiations with the US. Compared to polls from earlier in the campaign period, the ruling coalition has lost steam and could miss its target of winning 50 seats in the election, according to multiple polls conducted by local media. Polls by the Asahi newspaper said the LDP looked likely to win some 34 seats, while Komeito looked likely to secure about 9. Kyodo also said that the LDP could struggle to win 40 seats.
Arab News
a day ago
- Business
- Arab News
Japan's ruling coalition seen losing upper house majority, Asahi reports
TOKYO: Japan's ruling coalition will likely lose its majority in the upper house election on July 20, the Asahi newspaper said on Tuesday, heightening the risk of political instability at a time the country struggles to strike a trade deal with the US Prime Minister Shigeru Ishiba's ruling Liberal Democratic Party (LDP) and its coalition partner Komeito will likely struggle to retain the 50 seats needed to defend its majority in the upper house of parliament, the Asahi said. The LDP will likely win just around 35 seats, the paper said. The LDP currently hold 52 seats. Asahi said its report was based on phone and Internet surveys conducted on voters July 13-14, as well as research nationwide by the newspaper's journalists. Ishiba's administration has seen approval ratings slide as the rising cost of living, including the soaring price of Japan's staple rice, hit households.
