Summary：**Moody’s Holds Japan’s Rating Firm as Trillion‑Dollar Spending Sparks Market Turmoil***Japan's fisc

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**Moody’s Holds Japan’s Rating Firm as Trillion‑Dollar Spending Sparks Market Turmoil**

*Japan's fiscal policies may strain global markets, affecting liquidity and risk assets, while Moody's stable rating suggests cautious optimism.*

### Introduction
Moody’s Investors Service affirmed Japan’s sovereign credit rating on Tuesday, even as the government unveiled a ¥1 trillion‑plus stimulus package aimed at reviving post‑pandemic growth. The decision comes amid growing unease in bond markets, where yields have crept upward on fears that the massive fiscal outlay could crowd out private borrowing and push up inflation expectations.

### Key Developments
The Ministry of Finance announced a ¥1.2 trillion spending plan that includes direct cash handouts, subsidies for green technology, and increased infrastructure investment. Officials argue the measures are necessary to counteract weakening export demand and a lingering deflationary mindset. Within hours of the announcement, the yield on 10‑year Japanese government bonds rose to 0.45 %, its highest level since early 2023, while the yen slipped 0.3 % against the dollar.

Moody’s, however, kept Japan’s long‑term foreign‑currency rating at A1 with a stable outlook. The agency cited the country’s deep domestic savings base, strong institutional framework, and the Bank of Japan’s continued yield‑curve control as buffers against the fiscal expansion. Analysts at the rating firm noted that, although debt‑to‑GDP is projected to exceed 260 % by fiscal 2025, the majority of JGBs are held by domestic investors, reducing external rollover risk.

### Industry Analysis
Market participants are split on the implications. Fixed‑income strategists warn that the stimulus could exacerbate upward pressure on yields if the BoJ is forced to adjust its policy stance to curb inflation. Equity analysts, by contrast, see potential upside for sectors tied to construction and renewable energy, arguing that fiscal stimulus may finally break the cycle of weak capital expenditure that has plagued Japanese corporations for a decade.

From a global perspective, Japan