Japan PM Takaichi Rejects Link Between Blueprint and Bond Rout

An earlier draft of the document added to the unease. It urged monetary policy to support the government's growth strategy, which markets read as a signal the administration wants lower rates. That raised fears that political pressure could delay further Bank of Japan tightening, leaving the central bank behind the curve. Officials later said the final version would explicitly reaffirm the BOJ's independence and its price-stability mandate.

Takaichi is not entirely wrong about the global picture. Rising yields in the US have been the main external driver of upward pressure on Japanese borrowing costs in recent weeks.

Still, the speed of the move has rattled authorities. Finance Minister Satsuki Katayama recently floated potential adjustments to the Government Pension Investment Fund's asset allocation and the possibility of expanding retail ownership of JGBs. Those comments triggered a sharp rally in longer-dated bonds earlier this week, a sign the government is willing to support domestic demand for its own debt.

Higher energy prices tied to geopolitical tensions and a weaker yen have reinforced inflation, strengthening the case for the BOJ to continue normalizing policy. The bond market remains the key barometer of confidence in Japan's ability to balance fiscal expansion with credible debt management.