"With Japan's debt burden already more than 200% of its GDP, the prospect of more debt-fueled stimulus spending could cause investors to demand higher rates on long-term bonds. That in turn could add more upward pressure on bond yields elsewhere, like the U.S., which relies heavily on Japanese investors as top buyers of Treasury debt. The yield on the 10-year Treasury was flat at 4.121%."
"Takaichi is expected to formally become prime minister in a parliamentary vote later this month, and her approach to President Donald Trump will also be scrutinized. While she previously suggested Japan renegotiate the trade deal it struck with the U.S. this summer, Takaichi toned down her rhetoric after securing the LDP leadership spot on Saturday, saying that's not on the table now. Meanwhile, financial markets must continue to grapple with the ongoing government shutdown, which shows no signs of ending anytime soon"
Sanae Takaichi's selection as LDP leader shifts expectations toward looser fiscal and monetary policy, prompting the yen to weaken sharply against the dollar. Markets had anticipated Shinjiro Koizumi but the conservative Takaichi favors debt-fueled stimulus. Japan's public debt exceeds 200% of GDP, raising the risk that investors will demand higher long-term bond yields. Higher Japanese yields could push up global bond yields, including U.S. Treasuries, because Japanese investors are major Treasury buyers. Markets showed modest equity futures gains, rising oil and gold prices, and a 10-year Treasury yield around 4.121%. A government shutdown is delaying economic data ahead of Fed minutes.
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