The Japanese government’s plan to issue new debt to fund an extra budget targeting energy subsidies amid the Middle East conflict is intensifying fiscal pressures. This move has already pushed 10-year bond yields near 3%, signaling market concerns over Japan’s debt sustainability and complicating the BOJ’s monetary policy decisions. With inflationary pressures mounting and the yen under pressure, the central bank is caught between raising rates to defend the currency and avoiding exacerbating economic fragility. Traders should anticipate continued volatility in JPY, with further yen weakness likely if bond yields keep climbing.