Japanese government bond yields spike, reports of lowering food tax before elections reignite fiscal concerns.

The yield on Japanese government bonds has surged, with reports of a possible reduction in consumption tax reigniting fiscal concerns ahead of early elections expected to be held next month. The 30-year JGB yield rose by over 10 basis points to 3.59%, reaching its highest level since its introduction, while the 10-year and 20-year JGB yields also climbed to their highest levels since 1999. Prior to these changes, it was reported by Kyodo News that the ruling coalition was considering a tax plan that would include suspending the consumption tax and potentially implementing it as early as January next year. The new political party "Moderate Reform Alliance," formed by Japan's largest opposition party and former ruling coalition partners, is also considering seeking a reduction in the consumption tax while maintaining fiscal discipline and not issuing additional deficit bonds.