Market watchers and political experts welcomed the victory of Finance Minister Yoshihiko Noda, an advocate of a tax hike and a fiscal hawk, in the Democratic Party of Japan's presidential race Monday but the new DPJ leader, who was expected to be appointed prime minister Tuesday, faces an uphill battle in rebuilding the nation's fiscal health.
"The bond market has expectations for Noda's fiscal reconstruction and takes the result favorably," said Hideo Kumano, senior economist at Dai-ichi Life Research Institute.
The market has taken heed of the DPJ's tax increase stance, particularly since Moody's Investors Service Inc. lowered the credit rating of Japanese government bonds.