Economic and fiscal policy minister Heizo Takenaka said Tuesday that recent surges in long-term interest rates indicate stronger expectations for the economic recovery.
"At least at this point, I think that is a positive indication, rather than a negative one that stems from declining confidence in such securities as government bonds," Takenaka said at a news conference.
On Monday, the yield on the current benchmark 10-year government bond issue rose to its highest levels since Dec. 18, 2000, with prices declining in line with surges in Tokyo stocks.
But Takenaka said there are "good elements" to the yield surge.
However, Finance Minister Sadakazu Tanigaki took a cautious stance at a separate news conference.
He said he will closely monitor the moves of long-term interest rates, as higher rates would increase the government's debt-servicing costs.
Looking for reasons behind the surges in the long-term rates, Tanigaki cited such factors as the economic recovery as a whole, speculation among market participants and the supply-demand relationship of government bonds.
Tanigaki emphasized the need to scale back the issuance of government bonds while cutting fiscal spending.
"Though we are taking steps for stabilizing the debt management situation by diversifying bond holders, we should bring about more fiscal discipline," he said.
The yield on the key 10-year Japanese government bond issue continued to rise Tuesday on selling prompted mainly by gains in Tokyo stocks.