Market strategists have indicated that a decline in the approval rating for Japanese Prime Minister Takayuki Sanae may push the government toward a more accommodative stance on fiscal spending and tax policies, which could in turn pressure the Japanese yen and the nation's bond market.

While the approval rating remains above 50%, recent media polls in Japan show it has fallen to its lowest level since Prime Minister Takayuki Sanae took office. On Monday, the Prime Minister stated in parliament that she has not yet analyzed the specific reasons for the drop but will "refer to the poll results as a reflection of public opinion."

Beginning of the key strategist view

Naka Matsuzawa, chief strategist at Nomura Securities, suggested that if the polls continue to worsen, the government might intensify its efforts to push forward its current policies, a scenario that would be bearish for both bonds and the yen. The Prime Minister campaigned on a promise to reduce the consumption tax on food, but progress on this policy has been slow. Critics argue that the move is fiscally imprudent and smacks of pandering to voters. The Japanese government has stated it hopes to finalize the relevant plan by early August.

Matsuzawa added, "If the government further strengthens its reflationary policies, it will pose a threat to global bond markets and the yen." He noted this would also be negative for the Japanese stock market, as it could be seen by the market as a sign of the government's declining ability to execute policy. Rinto Maruyama, a senior foreign exchange and rates strategist at SMBC Nikko Securities, concurred with this assessment. He pointed out that public dissatisfaction with the government largely stems from its failure to effectively alleviate price pressures, and this "will drive the government to further expand fiscal spending in order to strengthen measures to cope with rising prices."

Extensive information and precise interpretation are available on the Sina Finance app. Editor: Liu Mingliang