The lowest bond risk in three years is showing investor confidence in Prime Minister Shinzo Abe’s ability to repair Japan’s finances and maintain the world’s lowest borrowing costs.
The cost to protect Japan’s government bonds against non-payment declined for a second-straight month as Abe decided to raise the sales tax to 8 percent from 5 percent. The five-year credit-default swap reached 53 basis points on Oct. 24, the lowest since November 2010. The 10-year JGB yield was at 0.61 percent, compared with 2.52 percent in the U.S.
Standard & Poor’s and Moody’s Investors Service have lauded Abe’s efforts to reform the economy and end 15 years of deflation. Government data last week showed consumer prices excluding energy and fresh food halted four years of declines, while Bank of Tokyo-Mitsubishi UFJ Ltd. expects the Bank of Japan to raise its growth forecast after an Oct. 31 meeting.
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