Japan PM Takaichi must face bond investors before winning over voters

Japanese Prime Minister Sanae Takaichi faces a crucial markets test in the final run-up to a snap election this weekend where she is hoping a decisive victory will give her a mandate for expansionary fiscal policy.
The finance ministry will auction some 700 billion yen ($4.5 billion) of 30-year government bonds on Thursday, three days before polls open. It’s a tenor that has been hyper-sensitive to worries about a loosening of fiscal restraint, suffering a rout last month as investors balked at Takaichi’s pledge to suspend the consumption tax on food.
Auctions have been a particular flashpoint for investors expressing concern about the state of Japan’s finances, which are the worst in the developed world with debt totalling 230% of GDP.
In four of the past five 30-year bond sales, yields spiked to fresh record highs either in the run-up to or immediately following the auction results.