Japan's government is reportedly looking to convene an extraordinary Diet session in early October, Asahi reports; expected to focus on consumption tax cuts and a reduction in the number of seats

Past episodes of consumption tax debate have cut both ways for JGBs: hikes were bearish for growth expectations, while cuts reopen the fiscal sustainability question that sits behind the super-long end, where term premium has been the sensitive point in recent years. The channel to watch is the long end of the JGB curve and any shift in issuance expectations rather than the front end, since BoJ policy is not the immediate transmission. For the yen, episodes of looser fiscal talk have tended to matter less than the rate differential, but sustained fiscal expansion narratives have on previous occasions added to bear-steepening pressure. The tells are whether the proposal is a temporary cut or permanent, how it is funded, and whether the session confirms a leadership contest outcome that sets the fiscal tone. Sequencing matters: extraordinary sessions of this kind have typically been used to pass supplementary budgets, so the calendar from session convening to budget submission is the follow-on.