Japan Faces Simultaneous Stock and Bond Sell-Off Today

　　The yield on Japan’s 10-year government bonds rose by 7 basis points to 1.87%, while the 30-year bond yield briefly touched 3.395%, hitting a record high.

　　According to Xinhua Finance, Bank of Japan Governor Kazuo Ueda revealed on the 1st that the central bank will "examine and discuss domestic and international economic activities, price conditions, and market dynamics based on various data at the December meeting, weighing the pros and cons of raising interest rates." He added that if economic and inflation forecasts materialize as expected, the central bank will continue to raise policy interest rates in line with improvements.

　　Ueda stated that the Bank of Japan's fundamental assessment of economic activity and prices remains unchanged. He specifically noted that the minimum wage increase for the 2025 fiscal year exceeds 5% year-on-year, which is highly likely to drive broader wage hikes among companies. He emphasized that "it is particularly important to confirm whether the preliminary trends toward next spring's annual wage negotiations have sufficient momentum."

　　Regarding inflation, Ueda pointed out that the core consumer inflation rate is expected to temporarily fall below 2% in the first half of the 2026 fiscal year before reaccelerating. He also stressed that in the latter half of the Bank of Japan’s three-year outlook period, inflation levels will roughly align with the 2% target.

　　Ueda cautioned that attention must be paid to the risk that recent price trends could affect potential inflation by influencing inflation expectations.

　　On monetary policy, Ueda clearly stated, "To smoothly achieve the price stability target, it is necessary to adjust the degree of monetary easing in a timely manner—neither too late nor too early." He explained that even if policy interest rates are raised, accommodative financial conditions will be maintained. Raising interest rates is not "stepping on the brakes" but rather "moderately easing off the accelerator" to support stable growth in the economy and prices.

　　Previously, according to Xinhua News Agency, due to multiple factors such as Prime Minister Takaichi Sanae's aggressive fiscal policy and her advocacy for maintaining loose monetary policies, investor concerns over the deterioration of Japan's fiscal conditions have been rising. In November, Japan's financial markets experienced a "triple sell-off" of stocks, bonds, and the yen.