As of the close on September 15, 2026, Japan's stock market delivered a dramatic turnaround. The Nikkei average index finished essentially flat at 63,484.10 points. During the early session, losses in the electronics and metals sectors dragged the index down 0.5% to open at 63,190.37 points, but the broader market successfully clawed back all of its losses in subsequent trading.

Meanwhile, the currency and bond markets were hit with intense volatility following a barrage of fiscal and defense policy announcements from the cabinet. On a program broadcast by Fuji Television today, Finance Minister Satsuki Katayama publicly responded to external criticism. The government had previously identified only three potential spending cuts during a voluntary review aimed at uncovering cost-saving opportunities, drawing heavy fire over perceived fiscal waste.

Katayama made it clear that the government will conduct a sweeping review and scale back redundant subsidies and tax breaks, signaling that official policy is not simply about unchecked spending. On the high-profile issue of consumption tax relief, she emphasized: "We will absolutely not issue new debt to fund a consumption tax cut. The necessary funds will be secured in a way that maintains market confidence." She added that current tax revenues are expected to come in slightly higher than anticipated.

A second major focus centered on expected adjustments to Japan's defense budget. According to sources familiar with the matter, Japan is considering setting a medium-term defense spending target at 3.5% of GDP to ensure its strategic pace aligns with NATO and other US allies. Because a significant increase in the defense budget signals a heavier long-term fiscal burden, Japanese bond prices tumbled sharply today, sending yields soaring. The 30-year government bond yield jumped 5.5 basis points to 4.12%, while the 10-year yield rose 4 basis points to 3.025%.