Landslide Takaichi Win Expected to Fuel Nikkei Surge and Yen Sell-Off

Japan's markets face heightened volatility Monday following PM Sanae Takaichi's decisive election victory, signaling likely expansion of fiscal stimulus. The "Takaichi trade" has already driven the Nikkei 225 to an all-time high of 54,782.83 and pressured the yen, which has fallen about 6% versus the dollar since October. Big winners include defense, AI, and semiconductors. With Japan's largest developed-world debt issuance, investors closely watch JGB yields and the yen as Takaichi balances proactive spending with fiscal discipline. Recent auctions showed strong demand, and 30-year JGB yields have declined 31.5 bps from a January 20 high of 3.88%.