Japan’s ¥18.3 trn ($117 bn) extra budget—90 % funded by fresh bonds—signals Tokyo’s return to post-Abenomics deficit financing just as global debt touches an all-time high. The package lifts total FY 2025 bond issuance to roughly ¥40 trn, erasing last year’s austerity gains and unnerving JGB traders already demanding higher yields. (reuters.com)

Fiscal hawks note that Japan’s debt-to-GDP ratio now hovers near 260 %, yet Prime Minister Takaichi doubles down on tax cuts and cash handouts while promising semiconductor and AI subsidies—policies that mirror Washington’s own industrial pivot. History warns: the 1998 stimulus surge bought one quarter of growth before debt costs crowded out investment; today’s ageing curve is far steeper. (ft.com)

The deeper pattern is international: the Institute of International Finance counts $338 trn in worldwide liabilities—five times global GDP—leaving governments progressively hostage to bond vigilantes. Unless spending tilts decisively toward productivity, a rate shock could trigger a synchronized fiscal crunch. As economist Mariana Mazzucato reminds us, “the real risk isn’t spending too much; it’s spending unwisely.”

— The Gist AI Editor

Tokyo’s Trillion-Yen Bet

Japan’s cabinet has approved a substantial supplementary budget of ¥18.303 trillion ($117.10 billion), signaling another dive into debt-fueled stimulus (WSJ). This move, intended to combat inflation anxiety, relies on issuing new government bonds, a strategy that tests the limits of fiscal prudence. From our perspective, piling new debt onto a nation whose existing obligations are already more than double its economic output is a high-stakes gamble. It risks triggering a sell-off in government bonds, potentially driving up borrowing costs and further pressuring the yen.

Kyiv’s Political Shockwave

A significant political tremor has hit Kyiv with the resignation of Andriy Yermak, President Zelenskyy’s powerful chief of staff, following a corruption probe (FT). Yermak has been a central figure in negotiations with both Russia and the U.S. This high-level departure introduces a dangerous element of instability for Ukraine’s government. The development adds another layer of geopolitical risk for markets to parse, particularly in the energy sector, as traders watch for any disruption ahead of this Sunday’s OPEC+ meeting (WSJ).

Global Supply Chain Under Duress

Global supply chains face renewed strain on two distinct fronts. In the technology sphere, a dispute between Dutch chipmaker Nexperia and its Chinese owner, Wingtech Technology, threatens to disrupt the flow of essential semiconductors used in the automotive industry (WSJ). Meanwhile, a biological threat has emerged in Spain, which reported its first cases of African swine fever in over three decades (Bloomberg). The outbreak endangers the EU’s largest pork producer, risking an export ban to key markets like China and signaling potential price shocks for consumers.

Stay tuned for the next Gist—your edge in a shifting world.

Japan Plans Extra Bond Issuance That May Fuel Fiscal Fears
— Wall Street Journal

Crude Futures Gain as U.S. Market Reopens
— Wall Street Journal

Nexperia Urges China Unit to Restore Chip Flow Amid Fears of Supply Squeeze
— Wall Street Journal

Spanish Pork Exports Threatened by First Swine Fever in 31 Years
— Bloomberg

Kalshi Market Maker Bets Against Consumers, Lawsuit Alleges
— Bloomberg

Eskom Profit Surges 36% as South African Power Utility Steadies
— Bloomberg

Germany’s Debt Embrace

Berlin has approved its 2026 budget, sanctioning the second-largest new debt issuance in the nation’s post-war history. Total government expenditures, including special funds for defense and investments, could now reach €630 billion, with the ordinary budget alone accounting for €525 billion (El Pais). This move signals a significant departure from Germany’s long-standing commitment to fiscal prudence, effectively sidelining the constitutional “debt brake.” For markets, this is a pivotal moment. I see it as an erosion of the fiscal discipline that once anchored the Eurozone, potentially fueling inflationary pressures and setting a risky precedent for other EU member states. This deliberate turn towards large-scale deficit spending will have lasting consequences for the stability of the euro and the trajectory of ECB monetary policy.

Kenyan Trade Deal Stalls

The EU’s free trade ambitions in Africa have hit a significant roadblock. A legal challenge from the East African Community (EAC) has forced the suspension of the EU-Kenya trade agreement, jeopardizing a trade relationship valued at €1.35 billion in Kenyan exports to the bloc last year (EUObserver). This development is a textbook case of how regional political entanglements can derail mutually beneficial economic partnerships. For businesses that have built supply chains around this agreement, the suspension introduces immediate and costly uncertainty. It undermines the principle of open trade, creating barriers where pathways to prosperity should be cleared. The move could push Kenya to seek more reliable economic alliances elsewhere, weakening the EU’s strategic commercial posture in a critical growth region.

Catch the next Gist for the continent’s moving pieces.

Putin-Trump-Gipfel in Ungarn? Orban erneuert Einladung
— ZDF

EU-Kenya trade deal faces uncertain future after legal challenge
— EUObserver

The fall of a prolific science journal exposes the billion-dollar profits of scientific publishing
— El Pais

Aktuelles zum Krieg in der Ukraine
— ZDF

Grünen-Fanclub war gestern
— ZDF

Alemania aprueba unos presupuestos con la mayor creación de nueva deuda desde la pandemia
— El Pais