The benchmark 10-year JGB yield rose 3.5 basis points to 0.515 percent, pulling further away from a 19-month low of 0.485 percent hit after the Bank of Japan shocked markets on Oct. 31 by expanding its already massive monetary stimulus. December 10-year JGB futures fell 0.30 point to 145.95.
Joining a growing list of media outlets reporting on the subject, the Sankei newspaper, citing unnamed government and coalition officials, said Prime Minister Shinzo Abe would delay a planned second sales tax increase by a year and a half and take the issue to voters in a snap election.
The higher tax is seen by analysts and policy makers as an important step to fund rising social security costs and curb Japan's ballooning debt.
Abe is said to be considering a delay in the second tax increase after the economy lost steam following a first tax hike in April.
Focus is on the third-quarter Japanese GDP data on Nov. 17, as any signs of further economic weakness could harden Abe's resolve to delay the tax hike.
Tokyo's Nikkei surged to a fresh seven-year high on Wednesday, cheered by the latest report that Abe will delay the tax increase and call a snap election to secure his political standing.