JGBs Enjoying Slow Road to Japan’s Sales Tax Cut

Japanese bonds are performing better than feared by some investors after the elections, partly because there is a delay to the sales tax cut, which had been flagged ahead of the vote. Japan’s Finance Minister Katayama adds there is no change to the plan that the tax cut will end in two years, which is reassuring for bond traders.

Moreover, the yen is stronger since the weekend, which is also a net positive for bonds as it avoids the risk of a negative-feedback loop developing between the currency and JGBs. Fixed-income investors are also more relaxed this week as ...