Soo Securities: It is expected that the trend of interest rate hikes in Japan will be difficult to stop.

Yusuke Matsuo, a senior market economist at Nomura Securities, stated in a report that due to the impact of the Middle East situation, it is highly probable that Japan's interest rates will continue to rise, despite Prime Minister Sanae Takaichi's attempts to restrain this trend. The market is concerned that global inflation will further escalate, and as long as the fundamental issue of the Iran conflict remains unresolved, the upward trend in interest rates is unlikely to slow down. The rise in the yen interest rates is also attributed to two market concerns: one being that energy subsidies may lead to a deterioration of Japan's domestic fiscal situation in the medium term, and the other being the belief that the Bank of Japan's decision to raise interest rates lags behind the market's pace. It was reported that Takaichi initially considered introducing an additional budget of around 3.5 trillion yen, but eventually decided to increase the reserve funds within the scope of reducing the deficit in government bonds from the previous fiscal year, reflecting her concerns about a significant increase in long-term interest rates. Since Japan currently has no additional plans for normalizing government bond issuances, the impact on government bond supply and demand is expected to be relatively limited in the short term.