Despite calls for resignation due to the LDP's poor performance and rising costs, Ishiba vowed to stay to avoid political deadlock.

JGB yield rose to the highest since October 2008 at 1.595% last Tuesday after opinion polls increasingly pointed to opposition gains. The 30-year yield shot to an all-time peak of 3.2%, and the 20-year yield leapt to the highest since November 1999 at 2.

Moody's has rated Japan A1, the fifth-highest level, with a "stable" outlook since December 2014. But it warned in a report in May that it may downgrade the rating "if prospects increase of a material and sustained widening in fiscal deficits leading to a significant deterioration" in Japan's already high debt burden.

TOKYO (AP) — Japanese Prime Minister Shigeru Ishiba said Monday he will stay in office to tackle challenges such as rising prices and high U.S. tariffs after a weekend election defeat left his coalition with a minority in both parliamentary chambers.

The embattled prime minister said he would remain in office to oversee tariff talks with the United States and other pressing matters.

Ishiba's ruling Liberal Democratic Party and its junior coalition partner Komeito were short three seats to maintain a majority in the 248-seat upper house in Sunday's vote.