Japanese government bond yields climbed to their highest level in 27 years after Prime Minister Fumio Kishida pledged to eliminate the value-added tax on food. The surprise policy announcement sparked immediate market volatility, with the 10-year JGB yield jumping over 60 basis points.

Investors reacted sharply to the fiscal expansion承诺, driving bond prices down and yields up. The tax cut proposal threatens to widen Japan's budget deficit, which already stands among the world's largest. Markets question the sustainability of such aggressive spending without corresponding revenue increases.

Analysts warn the move could undermine Japan's efforts to normalize monetary policy. The Bank of Japan faces mounting pressure to adjust its yield curve control framework. Traders are now betting on further policy shifts ahead of the upcoming election cycle.