30-year Japanese government bond yield hits a record high! Sanae Takaichi speaks out to reassure the market: will "control" bond issuance.

Amid a backdrop where Japan's deteriorating fiscal position has already pushed bond yields higher, Japanese Prime Minister Sanae Takaichi pledged on Monday to "control" bond issuance and act swiftly when markets become turbulent, in a bid to reassure investors worried about the worsening state of Japan's public finances. Speaking during a policy address in parliament, Takaichi said: "Fiscal sustainability is clearly a prerequisite for pursuing our 'responsible and proactive' fiscal policy." She said the Japanese government will continue to pursue fiscal sustainability while increasing spending to boost economic growth potential, including reviewing existing tax breaks and subsidy policies. The remarks reflect growing concerns in Tokyo over rising Japanese government bond yields. Japan's public debt is roughly twice the size of its economy, the highest among developed nations. As the Bank of Japan raises interest rates and gradually scales back bond purchases, financing costs are rising. On Monday, Japan's 30-year government bond yield hit a record high of 4.235%, driven by market concerns over the risk of increased debt issuance and inflation worries stemming from the Middle East war. Rising bond yields will increase the financing costs of Takaichi's spending plans. Takaichi said the Japanese government will attract private capital investment in economic growth areas by "implementing large-scale, long-term fiscal spending in a carefully planned and predictable manner." At the same time, she said the government will control the scale of annual bond issuance and adjust borrowing based on tax revenues, interest rates, debt financing costs, and economic and market developments. Takaichi added: "If unexpected changes occur in the economy and markets, we will carefully examine their impact and respond flexibly as necessary." However, she did not elaborate on specific measures. As market concerns over the fiscal health of developed economies intensify and drive global bond yields broadly higher, the focus of parliamentary debate in Japan is expected to shift toward fiscal policy. The Japanese government is also preparing next year's budget, with government ministries and agencies requesting record levels of spending. The Japanese government's current top priority is to push through legislation supporting Takaichi's plan. The plan proposes a two-year tax cut on food starting next April, but it has already triggered bond selling because the government has not yet detailed how it will fill the resulting fiscal revenue gap. In addition, Takaichi said the Japanese government will set aside multi-year funding for initiatives in strategically important economic security areas. Takaichi said: "We will steadily implement policies, get things done one by one, and communicate fully and carefully with the public and markets."