Japan’s upcoming election spurs investors as higher spending plans risk destabilizing bond markets

The impending Upper House election is raising alarms among investors as proposed spending plans may destabilize Japan’s bond markets. With long-term bond yields surging around 1% over the past year, volatility in financial markets is anticipated.

Fears of a credit downgrade are intensifying as interest payments are expected to make up 12.2% of government revenue this year, an increase from 9.9% last year. This situation raises concerns about the economic ramifications both domestically and globally.

Japanese investors, significant holders of U.S. Treasury bonds, could trigger global instability if the country’s credit rating is downgraded. Analysts warn that Japan’s economic direction and election promises of tax cuts could further exacerbate these risks.