Japanese government bonds extended their losses as markets braced for Prime Minister Sanae Takaichi’s stimulus package, set to be unveiled on Friday.

The benchmark 10-year yield rose six basis points to 1.825 percent, its highest level since 2008, while yields on other tenors also gained significantly. The 30-year yield hit 3.39 percent, a fresh record high.

The latest selloff came as traders focused on Takaichi’s spending plans, which have stoked concerns about Japan’s deteriorating fiscal health. Government bonds have slumped this week alongside the yen, which has weakened toward the 157-per-dollar level, heightening the risk of potential intervention.

Japan’s government is making final arrangements to compile an economic stimulus package of about ¥21.3 trillion($137 billion), public broadcaster NHK reports, citing an unidentified person.

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Meanwhile, open interest in 10-year Japanese government bond futures climbed to its highest level in about a year on Wednesday. The build-up, coinciding with a drop in futures prices, likely reflects an increase in short positions.

Major investors — including domestic banks, insurers, and overseas accounts — cut their net purchases of 10-year JGBs to the lowest level since October 2023, according to the latest data from the Japan Securities Dealers Association. In contrast, demand remained firm for two- to five-year notes, while super-long bonds continued to see modest net buying.

The tilt toward shorter maturities may reflect expectations that the Bank of Japan will raise borrowing costs only gradually, amid potential pressure from the Takaichi administration. Overnight index swaps now price in about a 20 percent chance of a BOJ rate hike by December.