Tokyo, 1 June 2026 – Japan’s bond market is entering a more fragile phase after Prime Minister Sanae Takaichi’s fiscal remarks drew renewed scrutiny from investors already concerned about the country’s debt burden, rising yields and the Bank of Japan’s gradual retreat from ultra-loose policy.
The immediate concern centres on Japan’s planned supplementary budget, which Takaichi said would total more than ¥3 trillion, or roughly US$19 billion, to help households manage higher living costs, including energy-related pressures. She sought to reassure markets by saying the package could be implemented without increasing overall bond issuance on a calendar-year basis, as stronger tax revenue, non-tax income and expected underspending would offset the need for additional deficit bonds.
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