What experts expect after Sanae Takaichi’s landslide
A screen displays Nikkei 225 Stock Average inside the Kabuto One building in Tokyo, Japan, on Monday, Feb. 9, 2026. Japanese stocks surged to fresh record highs, while bonds dropped, after Prime Minister Sanae Takaichi’s Liberal Democratic Party secured a landslide victory. Photographer: Kiyoshi Ota/Bloomberg via Getty Images
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A yen nearing 160 to the dollar, record Japanese equities and higher Japanese government bond yields could be on the table after Prime Minister Sanae Takaichi romped to a landslide victory in the country’s snap election Sunday.
Takaichi led the ruling Liberal Democratic Party to a supermajority in the Lower House, securing 316 seats in the party’s largest election victory since World War Two.
The result gives her the power to override any legislative veto from the Upper House, strengthening her ability to push her agenda through Japan’s legislature.
‘Takaichi Trade’ returns
Analysts said that her victory will lead to a revival of the so-called “Takaichi trade,” which typically involves a weaker yen, rising equities, and higher long-dated Japanese government bond yields. The trend reflects Takaichi’s dovish stance on monetary policy and expectations of expanded fiscal stimulus.
Some early signs of these emerged Monday. The benchmark Nikkei 225 soared past the 57,000 mark to a record high, while the broader Topix rose to an all-time peak of 3,825.67, exceeding Citi analysts’ pre-election expectations.
“The strong LDP win is warming the hearts of investors,” said Frederic Neumann, Chief Asia Economist at HSBC. “Equities, in particular, are celebrating the surprising election result, re-loading the ‘Takaichi-trade.'”
“The hope is that the strong majority will give the LDP more leeway in pursuing growth-friendly policies,” Neumann added.
This is echoed by Adrian Wong, global market strategist at J.P. Morgan Asset Management, who said the victory would lead to proactive fiscal measures, such as the two-year consumption tax cut, to increased corporate investment and aggressive corporate reforms.
Debt concerns linger
However, while most analysts agree on the boost to equities, some warned that heavier spending could pressure bonds and raise bond yields. The yield on the 10-year Japanese government bond rose 4 basis points to 2.27% on Monday.
Before the election, Takaichi had announced a record 122 trillion yen budget for the financial year starting April 1, marking a second straight year of record spending.
Japan is the most indebted nation in the world, with a debt-to-GDP ratio of almost 230% in 2025, according to data from the International Monetary Fund.
Takaichi told national broadcaster NHK after the election that she was pursuing “a shift in economic and fiscal policy and a ‘responsible, proactive fiscal policy.”
“We will move forward with areas where we can, and will call for cooperation from the opposition parties in areas…
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