Japan's Budget for Next Year Reaches 1,200 Trillion Won... All-Time High

‌Doubts arise over Japan's 'monetary easing without growth'... Government bond yields exceed 3% for the first time in 30 years
- Key Summary: Japan's 10-year government bond yield hit 3% at one point on the 1st, marking its highest level in 30 years since September 1996. This is interpreted as a result of growing market skepticism regarding "monetary easing without growth," as Prime Minister Sanae Takaichi's cabinet pushed to remove the upper limit on 2027 budget requests and implement food consumption tax cuts. While the preliminary budget requests from various ministries reached a record high of approximately 143 trillion yen (about 1,224 trillion won), the real Gross Domestic Product (GDP) growth rate for the second quarter of this year was 1.1% on an annualized basis, falling short of the market expectation of 2.0%. The Yen-Dollar exchange rate surpassed the 160 yen level again on the afternoon of the 1st. Previously, U.S. Treasury Secretary Scott Bessent met with Japanese Finance Minister Satsuki Katayama and Bank of Japan Governor Kazuo Ueda sequentially during the G20 Finance Ministers' meeting on the 31st, appearing to pressure them to present a path for fiscal sustainability and interest rate hikes to the market.