When bond yields in Japan rose this week, the doom-mongers were not far behind.
Calls of an imminent crisis have been around for decades. Recently, the threat of a ¡°Truss shock¡± has accompanied them ¡ª a suggestion that rates will spike so much that the market will force current Prime Minister Sanae Takaichi into retreat, defeat and possible ignominy, as happened to former U.K. leader Liz Truss in 2022. The more extreme scenarios suggest she¡¯ll take the economy down with her.
That narrative reappeared this week, as the unfortunate confluence of rising global bond yields triggered by the stalemate in Iran hit markets just as Takaichi was forced to call for the drafting of a supplementary budget to extend energy subsidies, spooking bond investors.
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