Ishiba Exit Triggers Debt Panic and Leadership Scramble in Japan

Japan's financial markets face turbulence as the departure of key political figure Ishiba sends shockwaves through government bond markets. Yields on 30-year JGBs surged to 3.285%, reaching historic highs, while 20-year yields hit levels unseen since 1999. The sudden spike in borrowing costs comes as the Nikkei retreats from its August peak of 43,876.42, closing Friday at 43,018.75 with analysts predicting further declines.

The political vacuum left by Ishiba's resignation after July's upper house election defeat has removed a crucial fiscal conservative voice. His absence coincides with record budget requests from the finance ministry and growing concerns about Japan's unsustainable debt trajectory. Market participants now brace for increased government spending, wider deficits, and looser monetary policy - a combination that's rattling bondholders accustomed to Ishiba's restraining influence.