JGBs fall in price terms in early Tokyo tradeause concerns over Japan’s fiscal policy.

Citi Research’s Tomohisa Fujiki warns of an increasing risk that the 10-year yield could hit 3% sooner than expected, citing a rising fiscal premium.

The 10-year JGB yield climbed 3 bps to 2.800% as investors reacted to the government’s 370-trillion-yen growth investment strategy and pressure on the BOJ.

Rising yields elevate borrowing costs for Japan, tightening the cost of government debt and tightening corporate financing. Investors should monitor fiscal policy shifts, as higher yields may prompt bond traders to adjust portfolios and could squeeze municipal bond spreads.