**[Japanese Government Bonds Face Sell-Off Wave, 10-Year Yield Hits Nearly 30-Year High, Central Bank Faces "2027 Political Window" Pressure]** BlockBeats News, August 19: The Japanese government bond market has recently experienced a significant sell-off. On Tuesday, the yield on Japan's 10-year government bonds briefly rose to 2.945%, marking the highest level in nearly 30 years since the mid-1990s, and remained around 2.89% on Wednesday. The market is concerned that if the 10-year JGB yield surpasses 3%, it will significantly exceed the fiscal assumptions of the Japanese government, further increasing debt financing costs and putting pressure on Prime Minister Sanae Takaichi's push for fiscal expansion policies. The Japanese government has currently allocated approximately ¥31 trillion for debt repayment. If yields continue to rise, future debt servicing costs could increase substantially. The Ministry of Finance predicts that by the fiscal year 2029, if the 10-year JGB yield rises to 3.6%, Japan's annual debt servicing costs could reach ¥41 trillion. Meanwhile, the Takaichi administration plans to stimulate the economy through tax cuts and investments, but policies such as food tax reductions have already led to decreased fiscal revenue. The market is concerned that the government may further expand debt issuance, sparking internal debates within the ruling party over fiscal discipline. Amid inflationary pressures and the risk of yen depreciation, expectations for interest rate hikes by the Bank of Japan are heating up. Market data shows that traders anticipate the Bank of Japan will implement two additional 25-basis-point rate hikes as early as January next year, potentially raising the policy rate to 1.5%. Former BOJ Executive Board Member Kazuo Momma stated that the endpoint of this rate hike cycle could reach around 1.75%; some analysts even believe the final rate level could approach 2%. The market is also closely watching the central bank's personnel adjustment window in 2027. Observers of the Bank of Japan believe that as pro-rate-hike members of the policy committee are set to leave in the summer of 2027, the central bank may aim to complete major rate hikes before then to avoid future shifts in the policy committee's stance affecting the tightening process. Currently, the Japanese government and central bank face a dilemma in addressing bond market pressures. On one hand, fiscal expansion could further drive inflation and bond yields higher; on the other hand, if the central bank intervenes heavily in the market through bond purchases, it could undermine the credibility of its tightening policies. [Original Link]