Potential Ramifications of Japan's Public-Private Investment Plan

Mizuho analyzes the economic implications of Japan's new JPY370 trillion public-private investment plan and its potential to pressure JGB markets. Simultaneously, the report notes that the BOJ remains on a hawkish path toward policy normalization.

Key Takeaways

• 1.The Japanese government announced a plan for over JPY 370 trillion in public-private investment through FY2040, though feasibility and funding mechanisms remain significant sources of uncertainty.
• 2.Higher fiscal spending and the issuance of 'bridging bonds' could put upward pressure on domestic interest rates.
• 3.The Bank of Japan remains hawkish, with expectations of continued interest rate hikes towards neutral with a roughly semi-annual cadence.

Table of Contents

• Potential ramifications of JPY370 trillion+ public-private investment plan for financial markets and Japan's fiscal position
• Reviewing BOJ Governor Kazuo Ueda's 24 June address
• Important Disclosure Information
• Analyst Certification
• Disclaimer

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