The bond market is growing more concerned that a new administration led by opposition leader Shintaro Abe calling for unlimited easing will stoke inflation and weaken the nation's finances.
The extra yield that investors demand to own 30-year Japanese government debt rather than 10-year securities climbed to 123 basis points Friday, the widest since March 2008. Longer bonds tend to be more sensitive to the inflation outlook and default risk. A similar spread for U.S. Treasuries has fallen 1½ basis points to 115 basis points this month.
Abe, head of the Liberal Democratic Party leader Abe and who polls show is favored to become the next prime minister after the Dec. 16 election, called last week for "unlimited" provision of cash by the Bank of Japan and benchmark interest rates below zero until inflation reaches 3 percent and the yen weakens.