Government bonds may fall on concern that a landslide win by the Democratic Party of Japan in Sunday's election will lead to an increase in spending on social programs, according to Mitsui Sumitomo Kirameki Life Insurance Co.
Ten-year yields are likely to climb to 1.56 percent in 2010, the highest since last October, said Shinichi Horikawa, general manager of the accounting and investment department at Mitsui Sumitomo Kirameki. The DPJ may boost national debt after defeating the Liberal Democratic Party, he said.
"A victory by the DPJ should result in the compilation of extra pump-priming measures, increases in debt issuance and increases in bond yields," Horikawa said. "When the yield resumes an uptrend next time, rises will be significant."