Takaichi Victory Spurs Markets, Clouds BOJ Hike

Sanae Takaichi won a surprise victory in the ruling LDP leadership contest, making her the near‑certain next prime minister and prompting markets to reprice for pro‑stimulus policy. Equities jumped — the Nikkei rose roughly 4–4.6% to new peaks — while the yen plunged past 150 to the dollar and hit record lows versus the euro. Long‑term JGB yields, including 10‑, 30‑ and 40‑year bonds, spiked even as short‑term yields fell on expectations the Bank of Japan will delay near‑term rate hikes. Overnight index swaps and strategists cut the odds of an October BOJ rate increase to about 24% and pushed the likely timing of a hike later in the year. BOJ Governor Kazuo Ueda said the risk of falling behind on inflation “is not that big” but warrants attention and reiterated the bank will keep options open and raise rates if activity and prices improve. Investors warned that potential fiscal stimulus and increased bond issuance to finance it could boost equities while raising inflation and complicating BOJ policy, with some traders also watching JPY‑linked crypto and carry‑trade flows.