/PRNewswire/ -- Market sell-offs in Japanese Government Bonds (JGBs) and the yen have signaled to Japanese Prime Minister Sanae Takaichi that creditors oppose her government's unconventional mix of unfunded fiscal measures and lenient central banking, according to a DoubleLine analysis.

Reviewing the "Honebuto shock," named for the debt-and-yen declines after Tokyo's yearly fiscal policy statement, Bill Campbell, leader of DoubleLine's Global Sovereign and Emerging Markets team, draws comparisons to the 2022 upheaval in gilts and the British pound triggered by UK Prime Minister Liz Truss's unfunded fiscal expansion proposal, which quickly ended her tenure.

"Having pledged more than 370 trillion yen of public-private investment through fiscal 2040, the government seeks monetary policy 'in coordination with' that growth agenda," Mr. Campbell notes. "Financial markets see this push to subordinate monetary policy to a political platform as adding pressure on a central bank already under fire for what critics call an overly cautious rate-hiking path."

Mr. Campbell cautions, "The Takaichi government should recognize that the JGB market, having asserted itself, may not show more patience than the gilts market that toppled the Truss government in 2022. In today's inflationary setting, fiscal credibility must be earned, not assumed - even in the G-7 countries. And a G-7 sovereign pursuing unfunded fiscal expansion risks inviting a buyers' strike."

Mr. Campbell leads the Global Sovereign and Emerging Markets team at DoubleLine and acts as lead Portfolio Manager for emerging markets and international fixed-income strategies. He sits as a permanent member of the firm's Fixed Income Asset Allocation Committee. Mr. Campbell has authored numerous research papers and client briefings on shifting trends and key events in global fixed income and currency markets. He earned a B.S. in Business Economics and International Business, along with a B.A. in English, from Pennsylvania State University and an M.A. in Mathematics, focused on Mathematical Finance, from Boston University.

About the Global Sovereign and Emerging Markets Team

The Global Sovereign and Emerging Markets team at DoubleLine oversees $XX billion in assets across sovereign debt, including U.S. Treasuries and non-U.S. sovereign issues, plus corporate fixed income securities from issuers in ex-U.S. developed and emerging markets. The team includes 14 investment professionals, such as portfolio managers, analysts and traders.

About DoubleLine

DoubleLine Capital LP is an investment adviser registered under the Investment Advisers Act of 1940. DoubleLine's offices can be reached by telephone at (813) 791-7333 or by email at [email protected]. In addition to its headquarters in Tampa, Fla., and an office in Los Angeles, DoubleLine maintains offices in Dubai, London and Tokyo. Media can reach DoubleLine by email at [email protected].

DoubleLine is a registered trademark of DoubleLine Capital LP.

SOURCE DoubleLine