Sanae Takaichi's historic win faces market scrutiny

Sanae Takaichi's Liberal Democratic Party won a postwar landslide that gives her broad authority in the lower house, and markets are waiting for details of her fiscal plans as Tokyo stocks climbed while the yen and government bond yields stayed steady.

Sanae Takaichi won a postwar landslide that gave the Liberal Democratic Party more than two-thirds of seats in the lower house, allowing her to advance her agenda without negotiating with other parties. She has proposed measures such as suspending the food sales tax for two years and said she would not issue fresh debt to fund that pledge. Tokyo stocks rose to record highs after the result, while the yen and 10-year government bond yields were steady as investors awaited details of her budget plans. Analysts and officials have said markets will closely scrutinize any signs of fiscal slippage and noted pressure from the United States over recent bond and currency moves. Key points: - Takaichi's LDP secured more than two-thirds of lower house seats, giving her wide legislative authority. - She pledged a two-year suspension of Japan's 8% food sales tax and stated she would not issue new debt to finance it. - Tokyo equity indexes rose to record levels while the yen and 10-year government bond yields remained steady pending policy details. - Market observers say attention will focus on funding for tax cuts, any signs of fiscal slippage, and the government's response to pressure over currency and bond market stability. Summary: The election result hands Takaichi strong legislative power to pursue economic measures, but markets are signaling that fiscal and currency outcomes will constrain policy choices. How the government plans to fund proposed tax changes and other stimulus will shape market reactions. Undetermined at this time.