Deutsche Bank says Japan may need to shift policy emphasis from defending the
yen to capping government bond yields to deliver its growth plan. Prime Minister
TAKAICHI unveiled a roughly $2.3 trillion growth strategy at the end of last
month that marks a major fiscal and industrial-policy inflection. Deutsche Bank
strategist Malika Sahdevda notes Tokyo must preserve fiscal sustainability while
freeing room for much larger spending; the plan relies on mobilizing domestic
and steering large institutional investors into domestic assets to
finance the package. Achieving that and ensuring nominal growth outpaces
financing costs may require measures to limit JGB yield rises — a material
policy pivot from FX defense toward yield control.
