The Japanese government recently sent an important fiscal signal. Prime Minister Fumio Kishida announced that Japan is expected to achieve a primary fiscal surplus of 1.34 trillion yen in the 2026 fiscal year — the first time this goal has been reached in the past 28 years. The cabinet has officially approved an annual budget plan of 122.3 trillion yen, aimed at promoting economic growth through fiscal reforms while ensuring long-term fiscal sustainability.

This move sends a clear message: the government is working to ease market concerns about Japan's fiscal situation. Data shows that the yield on Japan's 10-year government bonds has risen to its highest level in 27 years, reflecting cautious investor attitudes toward the sustainability of Japanese debt.

The underlying shift is also noteworthy. The government has gradually shifted its policy focus from solely balancing primary fiscal revenue and expenditure to a longer-term goal — reducing the debt-to-GDP ratio. This strategic adjustment indicates that Japan is seeking a more stable balance when facing global economic fluctuations and its own fiscal pressures. For investors closely monitoring the global macroeconomic environment, this move by Japan may signal new changes in the global financial landscape.