Why does Takaichi Sanae’s election matter for markets?

It sets policy direction on spending and reforms. Investors expect a push in defense, semiconductors, and AI, which can lift earnings for targeted sectors. The funding mix may raise JGB supply and affect yields. It can also influence the yen through growth and inflation, shaping equity, bond, and FX strategies.

How could new fiscal plans affect JGB yields?

Larger deficits can increase issuance and steepen the curve if longer maturities face weaker demand. Auction metrics and bank balance sheet capacity will be key. If inflation stays firm, yields may have limited room to fall. Clear funding plans can stabilize demand and improve price discovery at auctions.

What is yen policy risk under the new government?

If fiscal expansion meets higher foreign rates, the yen could weaken, lifting exporters but adding import‑price pressure. Markets will watch finance ministry guidance and any data‑driven responses. Stronger growth and clearer funding can support the currency. Communication around FX by top officials will be a near‑term driver.

Does the LDP supermajority change the policy outlook?

If the LDP supermajority is secured in the Lower House, bills can move faster through committees and floor votes. That shortens the path from proposal to spending. Without it, negotiations may extend timelines or alter bill content. Investors should track committee calendars and cross‑party support signals.

Law and Government

Japan Politics, February 18: Takaichi Sanae PM Win Puts Fiscal Push in Focus

ByDanny Kontos February 18, 2026February 18, 2026

Takaichi Sanae prime minister was elected by the Japan National Diet on February 18 as the country’s 105th leader, setting a fast track for a new cabinet and the budget. Markets expect a fiscal push in defense, semiconductors, and AI. The debate now is how added spending could affect JGB supply, inflation, and yen policy risk. For investors, shifts here can steer equities, banks, and currency‑sensitive trades in the near term.