By Tetsushi Kajimoto
TOKYO (Reuters) – Japan's finances are becoming increasingly precarious, Finance Minister Shunichi Suzuki warned on Monday, just as markets test whether the central bank can keep interest rates ultra-low, allowing the government to service its debt.
The government has been helped by near-zero bond yields, but bond investors have recently sought to break the Bank of Japan's (BOJ) 0.5% cap on the 10-year bond yield, as inflation runs at 41-year highs, double the central bank's 2% target.
"Japan's public finances have increased in severity to an unprecedented degree as we have compiled supplementary budgets to respond to the coronavirus and similar issues," Suzuki said in a policy speech starting a session of parliament.
It is not unusual for the finance minister to refer to Japan's strained finances. Despite the country's growing debt pile, the government remains under pressure to keep the fiscal spigot wide open. Japan must balance regional security concerns over China, Russia and North Korea, and manage a debt burden more than twice the size of its $5 trillion economy – by far the heaviest burden in the industrialised world.
Market showed little reaction to Suzuki's speech, in which he explained the details of the coming fiscal year's state budget worth a record 114.4 trillion yen ($878.9 billion).
Suzuki reiterated the government's aim to achieve an annual budget surplus – excluding new bond sales and debt-servicing costs – in the fiscal year to March 2026. The government, however, has missed budget-balancing targets for a decade.
The Ministry of Finance estimates that every 1-percentage-point rise in interest rates would boost debt service by 3.7 trillion yen to 32.5 trillion yen for the 2025/2026 fiscal year.
"The government will strive to stably manage Japanese government bond (JGBs) issuance through close communication with the market," he said.
"Overall JGB issuance, including rolling over bonds, remain at an extremely high level worth about 206 trillion yen. "We will step up efforts to keep JGB issuance stable."
"Public finance is the cornerstone of a country's trust. We must secure fiscal space under normal circumstances to safeguard trust in Japan and people's livelihood at a time of emergency."
LABOUR REFORM
Prime Minister Fumio Kishida echoed Suzuki's resolve to revive the economy and tackle fiscal reform. He stressed the need for a positive cycle of growth led by corporate profits and private consumption, which accounts for more than half of the economy.
"Wage hikes hold the key to this virtuous cycle," Kishida said in his policy speech. He vowed to push labour reform to create a structure that allows sustainable wage growth and overcome the pain of rising living costs.
"First of all, we need to realise wage growth that exceeds price increases," Kishida added, pledging to also boost childcare support, and push investment and reform in areas such as green and digital transformation.
($1 = 129.5700 yen)
(Reporting by Tetsushi Kajimoto; Editing by William Mallard and Jacqueline Wong)
TOKYO (Reuters) -The Bank of Japan should let government bond yields move more flexibly and be ready to raise short-term interest rates swiftly if "significant" upside risks to inflation materialise, the International Monetary Fund (IMF) said on Thursday. In a proposal after an annual policy consultation with Japan, the IMF said the central bank's ultra-loose monetary policy remains appropriate as inflation is likely to fall back below its 2% target by the end of 2024 unless wages rise significantly. But with upside risks to inflation becoming more prominent in the world's third-biggest economy, the IMF said, the Bank of Japan (BOJ) should give long-term yields freer rein, such as by raising its 10-year bond yield target or widening the range it tolerates.
The US dollar has been back and forth during the trading session on Wednesday, as we continue to hang onto the ¥130 level.
(Bloomberg) — Growing expectations that the Bank of Japan will drop its yield-curve control policy sooner rather than later are triggering a 94% surge in sales of yen bonds with shorter maturities that are less vulnerable to future interest-rate action.Most Read from BloombergHindenburg vs Adani: The Short Seller Taking On Asia’s Richest PersonNYSE Mayhem Traced to a Staffer Who Left a Backup System RunningHindenburg’s Short Sell Call Shaves $12 Billion Off Adani StocksExodus of Wealthy Chinese
Our guide to streaming the winners of the Academy Awards' top prize, including 'Forrest Gump' and 'Titanic.'
Japan cut its view on the overall economy for the first time in 11 months in January, as China's COVID-19 infections and a slowdown in global demand for tech and semiconductors hurt exports, especially to Asia. The government expects the economy, the world's third largest, will pick up going forward but Japan needs to pay full attention to the impact from China's spreading infections after it dropped stringent pandemic curbs, the report said. The economic downgrade followed the Bank of Japan's move last week when it slashed its economic growth projections for the next two fiscal years amid worries that slowing global demand will weigh on Japan's export-reliant economy.
(Bloomberg) — The Bank of Japan is facing a fresh headache in the dysfunctional local bond market — it has become so illiquid that some securities are being kicked out of an important global index.Most Read from BloombergHindenburg vs Adani: The Short Seller Taking On Asia’s Richest PersonNYSE Mayhem Traced to a Staffer Who Left a Backup System RunningHindenburg’s Short Sell Call Shaves $12 Billion Off Adani StocksExodus of Wealthy Chinese Accelerates With End of Covid ZeroIBM to Cut About 3,90
(Bloomberg) — Shares in Adani Group companies lost $12 billion in market value after US investor Hindenburg Research said it was shorting the conglomerate’s stocks and accused firms owned by Asia’s richest person of “brazen” market manipulation and accounting fraud.Most Read from BloombergHindenburg’s Short Sell Call Shaves $12 Billion Off Adani StocksUS Confronts China Over Companies’ Ties to Russia War EffortJosh Kushner Is Richer Than Trump After Billionaires Back His FirmTech-Led Slide Fade
Disappointment could leave the broader market vulnerable to a selloff following tech stocks’ strong start to the year.
Right now, the average price for a loaf of bread is, approximately, $1.87. Under a new law proposed by House Republicans, that price would go up to more than $2.50. This would be the result of the Fair Tax Act, … Continue reading → The post Congress to Vote on Whether to Abolish the IRS and Introduce One National Tax Rate appeared first on SmartAsset Blog.
Extending their midweek slide, shares of Plug Power (NASDAQ: PLUG) are continuing to tumble lower today, to the chagrin of fuel cell and hydrogen investors. While anticipation of the company's business update contributed to the stock's sell-off yesterday, investors are reacting today to the actual details of the update, in addition to pessimistic opinions echoing on Wall Street. As of 11:07 a.m. ET, shares of Plug Power are down 7.2%.
The GOP plan would set a national sales tax of 30% and eliminate the IRS.
Microsoft founder and billionaire turned philanthropist Bill Gates recently laid to rest the long-time conspiracy theory that he owns some 80% of all U.S. farmland in his 11th appearance in an “Ask Me Anything” (AMA) session on Reddit. What Happened: Gates, answering dozens of questions over the course of a few hours during the AMA, including: “Why are you buying up so much farmland, do you think this is a problem with billionaire wealth and how much you can disproportionally acquire?” In respon
Yahoo Finance’s Ines Ferre joins the Live show to discuss the White House’s take on Chevron’s buyback program.
Interest rates are trending higher. Here are a few reasons to be happy about it.
Yahoo Finance's Dan Howley gives an update on the latest tech layoffs hitting IBM and SAP.
While the top- and bottom-line numbers for Northrop Grumman (NOC) give a sense of how the business performed in the quarter ended December 2022, it could be worth looking at how some of its key metrics compare to Wall Street estimates and year-ago values.
The retailer said banks have determined it has defaulted on its credit lines and it doesn’t have the funds to repay them, as it prepares for a potential bankruptcy filing.
The S&P 500 (SPX) has gained 5% this year, and the tech-heavy Nasdaq Composite (COMP) is up 8%, even with a seemingly daily stream of job-cut announcements. Veteran Wall Street strategist Joe Lavorgna is certainly in the camp expecting a recession.
As the U.S. and its allies start sending Abrams, Leopards and other tanks to help Ukraine, those vehicles are set to change the dynamics of the war along the front lines. WSJ examines how the tanks that Ukraine will receive from the West compare with Russia’s vehicles. Illustration: Adam Adada
Although anything could happen, investors should avoid Bed Bath & Beyond or any other company that expresses doubts about its future. Admittedly, one can forgive investors for being tempted to buy in hopes of a short squeeze. Also, whatever happens with the stock price, investors should remember that bleak financials back up management's recent concerns about Bed Bath & Beyond's future.
