Japan 10- and 20-year JGB yields surged to multi-decade highs this week as markets question Prime Minister Takaichi’s commitment to fiscal discipline and monetary-policy normalization, and government spending raises fiscal strain. The 10y-2y JGB spread widened to 143bps on Wednesday, the most since 2004, reflecting rising long-end inflation/price risk alongside weaker expectations for near-term Bank of Japan rate hikes. Daiwa senior economist Kento Minami said recent curve steepening is a warnin

Japan 10- and 20-year JGB yields surged to multi-decade highs this week as markets question Prime Minister Takaichi’s commitment to fiscal discipline and monetary-policy normalization, and government spending raises fiscal strain. The 10y-2y JGB spread widened to 143bps on Wednesday, the most since 2004, reflecting rising long-end inflation/price risk alongside weaker expectations for near-term Bank of Japan rate hikes. Daiwa senior economist Kento Minami said recent curve steepening is a warning signal, highlighting a gap between market-priced risks and government fiscal-monetary policy.