Japanese government bond yields rose sharply amid speculation of an upcoming tax reduction, while food sector stocks surged on expectations of increased consumer spending. The 10-year JGB yield climbed to 0.98%, its highest level since early 2023, as investor sentiment shifted toward growth-oriented assets.
- 10-year Japanese government bond yield rose to 0.98% on January 19, 2026
- Consumer Staples Index on TSE gained 2.7% on tax cut speculation
- Meiji Holdings (7001.T) and Kirin Holdings (2503.T) rose 5.1% and 4.3%
- Japan’s public debt exceeds 260% of GDP
- JGB futures open interest increased 18% over five sessions
- Inflation reached 3.1% in December 2025
Japanese government bond prices declined on Monday, with the 10-year yield rising to 0.98%, marking its highest point since January 2023. This shift follows emerging market chatter about a potential tax cut in the upcoming fiscal package, which is expected to be unveiled in early February. The rise in yields reflects growing anticipation of increased government borrowing to fund stimulus measures, prompting a re-pricing of fixed-income assets. The move was mirrored by a notable rally in food and consumer staples stocks. The Tokyo Stock Exchange’s Consumer Staples Index rose 2.7%, led by major food producers such as Meiji Holdings (7001.T) and Kirin Holdings (2503.T), which gained 5.1% and 4.3%, respectively. Analysts suggest that anticipated tax reductions could boost household disposable income, driving demand for everyday goods and enhancing profitability for retailers and food manufacturers. Market participants are closely monitoring the Bank of Japan’s stance, as the central bank has maintained ultra-low interest rates since 2016. With inflation at 3.1% in December 2025, the authorities are under pressure to balance fiscal stimulus with inflation control. The bond market’s reaction underscores the sensitivity of yield curves to policy expectations, particularly in a high-debt environment where Japan’s public debt exceeds 260% of GDP. Investors also noted a sharp increase in trading volume for JGB futures, with open interest rising by 18% over the past five sessions. This liquidity surge indicates active positioning ahead of policy announcements, with hedge funds and institutional investors adjusting portfolios in anticipation of fiscal expansion. The stock-bond divergence highlights a broader market repositioning from defensive to cyclical assets.