Updating major FX. Its still early, just 0630 in Japan and 0530 in Hong Kong and Singapore. Pretty much just New Zealand and Australia active right now. Be wary of low liquidity thin trade until markets thicken up in the hours ahead.
Takaichi’s super-majority win clears the way for fiscal expansion, lifting stocks but renewing pressure on JGBs and the yen as intervention risks stay firmly in play.
Summary:
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Sanae Takaichi’s coalition secures a historic landslide and two-thirds super-majority
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Result clears legislative hurdles for tax cuts and higher fiscal spending
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Equities seen benefiting, while JGB yields and the yen face renewed pressure
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Analysts flag funding risks around food tax cuts and rising defence outlays
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Intervention risk remains live as Satsuki Katayama signals readiness to act
I posted info earlier:
Adding in a little more now and reupping the warning from the finance minister that she may have intervention type words to mutter today, Monday, February 9, 2026.
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Japan’s financial markets are bracing for renewed volatility after Prime Minister Sanae Takaichi’s coalition swept to a historic election victory, delivering her a powerful mandate that strengthens her grip on fiscal, economic and security policy.
Projections show Takaichi’s Liberal Democratic Party winning as many as 328 of the 465 seats in the lower house, comfortably surpassing the 233 needed for a simple majority within hours of polls closing. Combined with coalition partner Ishin, the ruling bloc is set to command a two-thirds super-majority, giving Takaichi the ability to override upper house vetoes and fast-track legislation.
The scale of the win significantly eases political constraints and reinforces expectations that the so-called “Takaichi trade” will re-emerge. Japanese equities are widely expected to benefit from prospects of expansionary fiscal policy, defence spending and investment in artificial intelligence and digital transformation. At the same time, the result has unsettled bond and currency markets, which remain sensitive to Japan’s already-heavy debt burden.
Investor unease centres on Takaichi’s pledge to suspend the 8% sales tax on food to ease household cost pressures. While she has stressed fiscal sustainability and said discussions on the tax cut would be accelerated, analysts see unanswered questions around funding. Market participants believe the election outcome strengthens her hand politically but also increases pressure on her administration to demonstrate credible fiscal arithmetic.
Strategists note that the landslide victory reinforces expectations of higher government spending beyond the tax cut, particularly in defence and strategic investment, keeping upward pressure on long-dated Japanese government bond yields. Some analysts see 10-year yields testing recent highs again, arguing that even assurances around limiting bond issuance may only slow, rather than reverse, the broader upward trend.
The yen remains a key pressure point. Analysts expect USD/JPY to gravitate back toward the 160 level, with authorities likely to resist disorderly moves near 159. While rate differentials continue to weigh on the currency in the near term, some see scope for yen stabilisation or recovery later in 2026 as policy gaps narrow.
Attention is also turning to the Bank of Japan, which faces a delicate balancing act. A weaker yen risks importing inflation, while rising yields threaten tighter financial conditions. Analysts generally expect the BoJ to stick with a gradual tightening path, with a 25bp rate hike still more likely in June than April, pending wage data and inflation trends.
Finance Minister Satsuki Katayama moved quickly to reassure markets, saying Japan would take a “professional” approach when managing its vast foreign reserves. While acknowledging reserves could be considered amid sharp yen moves, she cautioned that they play a critical role in currency intervention. Katayama said authorities stand ready to engage markets and would seek dialogue if volatility intensifies.
This article was written by Eamonn Sheridan at investinglive.com.