As Japanese Prime Minister Sanae Takaichi’s spending plan intensifies market concerns about fiscal expansion, the country’s ultra-long-term government bond yields have risen.

30-year Treasury yields rose by 10 basis points to 3.93%, and 20-year Treasury yields jumped nearly 9 basis points to 3.64%. The yen fell to its lowest level against the US dollar in 40 years. The government led by Sanae Takaichi unveiled a roadmap planning to achieve more than 370 trillion yen (2.3 trillion US dollars) in public and private investment in strategic sectors such as artificial intelligence and semiconductors by fiscal year 2040, intensifying market concerns over Japan’s massive debt-to-GDP ratio. The prime minister’s inclination toward monetary easing is also seen as a potential barrier to Bank of Japan rate hikes. Ryutaro Kimura, senior bond strategist at BNP Paribas Asset Management, said: “Investors are increasingly focusing on the Takaichi government's fiscal policy, as well as the government’s political pressure on the Bank of Japan, which is dampening market expectations for rate hikes in the near term.”