North Korea Threats: Kim Yo-jong warned Japan it will consider “additional military options” after Tokyo’s Tomahawk cruise missile test and participation in US-led drills, accusing the US of backing Japan’s rearmament and signaling further escalation. Defense Policy: Japan’s 2026 Defense White Paper urges stronger defense industry capacity and arms exports, while Tokyo also seeks deeper cooperation with Europe and warns China’s military activity is an “unprecedented” strategic challenge; China rejected the white paper as “false narratives.” US-Japan Alliance Talks: Japan and the US began working-level talks on host nation support for US forces in Japan, with Washington pressing for higher Japanese contributions to base protection and facilities. Yen, Markets, and Intervention: The yen steadied after a volatile stretch following historic joint intervention with the US; US Treasury Secretary Scott Bessent said the move was a show of confidence and “whatever it takes” to support stabilization. Consumption Tax Cut: Japan’s cabinet approved a two-year food consumption tax cut to 1%, but debate continues over funding and whether the measure will hit its intended economic effects. Crypto Regulation: Japan’s Financial Services Agency will launch a dedicated Crypto Assets and Stablecoins Division on Aug. 7 to centralize oversight. Local Non-Nuclear Push: A record number of local assemblies urged the Takaichi government to uphold Japan’s Three Non-Nuclear Principles as security documents are set for revision. International Links: Japan reaffirmed support for Bangladesh’s stability and prosperity under their strategic partnership, and a Philippines House resolution marked 70 years of PH-Japan friendship.