Japanese Prime Minister Sanae Takaichi’s cabinet has just approved the largest round of extra spending since the Covid pandemic, deploying funds to address the frustrations of voters in a package that may unsettle investors scrutinising the nation’s finances. The stimulus plan includes $US112 billion in general account spending, with the bulk of the measures aimed at price relief for such things as subsidies for gas and electricity bills for every household, a one-off cash handout per child and funds to aid regional Japan – much of this sounds familiar. Increased stimulus equals debt which pushes up interest rates – one of the reasons the Nikkei has endured a tough few weeks.
- We can see the JGBs now consolidating their recent gains into 2026.
MM is neutral towards Japan’s JBGs as they approach the 1.8-2% resistance area
