The Cabinet overhaul has revived failing public support for Prime Minister Shinzo Abe’s economic policies and invigorated markets that have shown more confidence in him than his predecessors.

The cost to protect government debt against default slid to 34 basis points after last Wednesday’s shuffle, the lowest since October 2008, CMA data show.

Abe presided over a 46 basis-point decline in bond risk, twice the drop overseen by his predecessor, Yoshihiko Noda, and the most in Bloomberg data going back to October 2004. The Topix index rallied 1.2 percent last week and the annualized 29 percent gain in shares in his 20-month term surpasses any other premier in at least two decades. The yen tumbled to a six-year low versus the dollar.

Abe needs to sustain a weaker yen, a rallying stock market and improved risk appetite to revive the economy, amid doubts that he can complement fiscal and monetary easing with deregulation. After changing all but six of his 18 ministers, SMBC Nikko Securities Inc. dubbed the Cabinet the “Abengers,” noting their task is as challenging as any faced by characters in the Walt Disney Co.’s superhero movie.

“The economy may be headed out of deflation, but because of Japan’s aging population it’s hard to know right now whether the ultimate result will be success for Abenomics, or painful stagflation,” said Hidenori Suezawa, an analyst at SMBC Nikko. Suezawa said Abe has a chance to avenge the failure of his first stint as prime minister, which ended in illness in 2007 after a year.

Support for Abe rose in three domestic media polls published after he appointed a record-equaling five women, boosting his approval rating 13 percentage points to 64 percent in a Yomiuri Shimbun survey, and 11 points to 60 percent in a Nikkei poll. Kyodo News found that support for Abe’s Cabinet increased 5 points to 55 percent, while backing was unchanged at 47 percent in a Mainichi Shimbun poll.

Japanese shares also rose, completing a three-day gain after Abe made Yasuhisa Shiozaki health minister, giving him a mandate to get the $1.2 trillion Government Pension Investment Fund to buy higher-yielding assets.

The turnaround comes after disappointment in the economy had pushed the Cabinet’s approval rating below 50 percent from highs of more than 70 percent in April last year, when the Bank of Japan announced an unprecedented bond-buying program.

Tadashi Matsukawa, the head of fixed-income investment at PineBridge Investments Japan Co., said Abe’s success will depend on his ability to push through structural reforms that make up the third arrow of his strategy.

“It’s too early to assess Abe’s new Cabinet,” he said. “As Japan faces an urgent problem of shrinking and aging population, structural reforms to revitalize the economy are essential.”

The nation’s population declined by the most on record in 2013, shrinking for a seventh straight year, according to health ministry estimates. The Abe administration’s decision to raise the sales tax to 8 percent in April is aimed at helping offset rising welfare costs that threaten to worsen a debt burden that is already twice the size of the economy.

The drop in sovereign debt risk is driven by investor confidence that taxes will rise after Sadakazu Tanigaki was appointed secretary-general of the ruling Liberal Democratic Party, according to Dai-ichi Life Research Institute Inc.

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