Takaichi Rolls the Dice, Wins Big, and the Nikkei, JGBs, and the Yen Respond in Kind
Global bond markets feel the heat from the Takaichi victory, chatter of more Chinese selling of Treasuries, and loss of confidence in Starmer.
Key Takeaways
Takaichi Win Powers Nikkei Surge: The big news overnight was Sanae Takaichi recording a historic landslide victory, with the LDP securing a two-thirds super-majority position in the 465 seats in the Lower House of Parliament (this is the largest victory for the dominating party in the post-WWII era). The Nikkei 225 responded overnight with a big +3.9% surge (now up +12% for the year), and helped fuel a broad Asian equity rally.
Dow Euphoria Hides Bear Markets in Growth Stocks: There was reason for the bulls to celebrate on Friday with the Dow piercing the 50,000 threshold for the first time. The “buy the dip” theme is alive and well. But make no mistake — a whole lot of people are hurting. Not in Consumer Staples. Not in the Banks, Transports, Energy, Materials, or Semiconductors. But there are many mega-cap growth stocks in either steep corrections or outright bear markets.
High-Stakes U.S. Data on Deck: It’s a busy week ahead from a U.S. economic data standpoint: December retail sales tomorrow (consensus at +0.4% MoM), January nonfarm payrolls on Wednesday (consensus at +70k), and CPI for January on Friday (consensus at +0.3% for the headline and core). None of these numbers would be particularly constructive for the maligned bond market, but at least the bar has been set high across the board.
