Group 1 - The Japanese government may intervene in the foreign exchange market sooner than many investors expect, as the yen continues to slide towards 160 yen per dollar [1] - The last intervention by Japanese authorities occurred in July 2024 when the yen reached 160 yen per dollar, and the market anticipates that this level will trigger a new round of intervention [1] - Factors pressuring the yen include speculation that Prime Minister Kishida's stimulus policies may prevent the Bank of Japan from raising interest rates in the short term, while expectations for a Federal Reserve rate cut have cooled, leading to an expanded interest rate differential that weighs on the yen [1] Group 2 - The Japanese fiscal situation has significantly improved, with the net debt-to-GDP ratio decreasing from 133% to 85% over four and a half years, indicating a reduced need for large reserves to maintain fiscal stability [2] - Kishida's economic plan, which exceeds expectations, will be funded by an additional budget of 17.7 trillion yen, with new bond issuance for the latest economic plan estimated to be slightly below 10 trillion yen [2] - If the Bank of Japan raises borrowing costs in January, it may pause the tightening cycle for about a year to align with the government's growth-supporting stance before resuming tightening until rates reach around 2% [2] Group 3 - The recent rise in Japan's 10-year government bond yield to 1.8%, the highest level since 2008, reflects market optimism about the Japanese economy rather than concerns over fiscal conditions [3] - The increase in yields is seen as the market pricing in the possibility of higher terminal rates, countering rumors that investors are "selling Japan" [3]