Japan’s ruling coalition faces potential losses in upper house election, impacting yen and JGBs. Rates on JGBs surged last week, hitting 1.6%, with election results likely pushing yields higher. Rising Japanese rates could drive US Treasury rates up or narrow the spread between Treasuries and JGBs, affecting the yen carry trade.

USD/JPY fluctuates amid concerns over Japan’s fiscal situation, inflation, tariffs, and election results. Pressure on US yield curve mounts as 5-year swaps break out of range, signaling potential inflation ahead. Yield curve could steepen further, with 10-year rates pulling away from the 2-year.

Japan’s election results may influence US markets, given global financial interconnectedness. Any impact on Japan’s bond markets could reverberate in the US. Watch for potential effects when trading opens in Japan tonight at 8 PM ET. Stay tuned for updates on market reactions and implications.

Read more at Investing.com: Japan’s Election Results Could Send Shockwaves Through US Bond Market This Week