Tokyo, 29 July 2026 – Japan’s prime minister faces a worsening political cycle in which falling public support, pressure for fiscal concessions and market anxiety are reinforcing one another, complicating the government’s relationship with bond investors and the yen.
Political weakness can encourage promises of additional spending or tax relief as leaders try to rebuild support. Markets may interpret those measures as a threat to fiscal discipline when public debt is already high, particularly if the government cannot present a credible medium-term funding plan.
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