Japan PM Takaichi must face bond investors before winning over voters

Japanese Prime Minister Sanae Takaichi faces a crucial markets test in the final run-up to a snap election this weekend where she is hoping a decisive victory will give her a mandate for expansionary fiscal policy.



The finance ministry will auction some 700 billion yen ($4.5 billion) of 30-year government bonds on Thursday, three days before polls open. It's a tenor that has been hyper-sensitive to worries about a loosening of fiscal restraint, suffering a rout last month as investors balked at Takaichi's pledge to suspend the consumption tax on food.



Auctions have been a particular flashpoint for investors expressing concern about the state of Japan's finances, which are the worst in the developed world with debt totalling 230% of GDP.



In four of the past five 30-year bond sales, yields spiked to fresh record highs either in the run-up to or immediately following the auction results.



That includes the sharp selloff on October 7, which came just three days after Takaichi won the ruling Liberal Democratic Party's leadership contest, setting her up to become prime minister.