TOKYO: Japanese government bonds fell in early trade on Tuesday, pushing up yields, as investors returning from a long holiday weekend digested the ruling coalition’s recent election defeat.
The yield on 10-year JGBs added 1.5 basis points (bps) to 1.535%, rising for the first time in four sessions.
The benchmark 10-year JGB futures lost 0.09 yen to 138.26, threatening to end a three-session advance.
Other cash bond tenors had yet to trade as of 0019 GMT.
Yields move inversely to bond prices.
Japan’s ruling coalition lost control of the upper house in Sunday’s election, a widely anticipated setback that further eroded the authority of Prime Minister Shigeru Ishiba, who lost his majority in the more powerful lower house in October.
However, Ishiba has vowed to stay on, warning against creating a political vacuum as he faces an August 1 deadline for a trade deal with the United States.
While the ballot does not directly decide the fate of Ishiba’s administration, it heaps pressure on the embattled leader and could either imply policy paralysis or a bigger fiscal deficit, depending on the ruling party’s next moves and the opposition’s strength.
Japan has the largest debt burden in the developed world at about 250% of its GDP.
The 10-year yield pushed to the highest since October 2008 last Tuesday after opinion polls increasingly pointed to gains for opposition parties, which support debt-funded consumption tax cuts to alleviate the burden of the rising cost of living.
The 30-year yield shot to an all-time high of 3.2%.
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