JGB sell-off may have run its course

The 10-year JGB yield has levelled off over the last couple of weeks even as yields elsewhere have surged to multi-year highs. While our fiscal trackers suggest that growth in government spending has accelerated sharply since PM Takaichi came to power, revenue growth has kept pace. And amidst signs that soaring borrowing costs have prompted the government to question the wisdom of much looser fiscal policy, we expect the 10-year JGB yield to remain around 3%.