Despite dovish squawks, fiscal hawks hold the upper hand

key takeaways

• After resisting pressure to campaign on a stimulus package and a consumption tax cut, Prime Minister Ishiba Shigeru has stepped up his rhetoric on the need for fiscal consolidation.
• While rising Japanese government bond yields may reflect market concerns about more lavish spending, fiscal doves may have less influence than meets the eye.
• The Ishiba government is preparing to pursue gradual fiscal consolidation through the FY2026 budgetary process.