Japan's Fiscal Policy Fuels Global Bond Market Sell-Off

The global bond market is experiencing a rapid sell-off, with Japan's Tokyo story playing a significant role in intensifying this trend. Japanese Prime Minister Sanae Takaichi is set to address the country's parliament, assuring legislators of her government's commitment to a 'responsible, expansionary fiscal policy.'

Takaichi's government has made record spending requests to boost Japan's slow economic growth, but concerns are rising about where this money will come from. The plan includes a 14-year, 370 trillion yen ($2.3 trillion) private-public investment initiative without specifying the public's contribution.

Japan's cabinet has also approved a proposal to cut the consumption tax on food from 8% to 1%, effectively eliminating it for two years, with payouts to households equal to the remaining 1%. However, Takaichi hasn't explained how this will be funded.