Historic win pits Takaichi's vision of Japan against the markets

"Now she has the biggest election mandate of any Japanese leader since World War II. The surprisingly large victory margin allows the staunch conservative to implement her nationalist vision of a more forceful, outspoken, self-sufficient Japan. She can strengthen Japan's military, stand up to China and North Korea, move closer to the U.S., ramp up strategic investments, pressure companies to raise wages and push the central bank to think twice before raising interest rates."

"Her main opposition now may not come from parliament, but from the markets. The hurdle of gaining market confidence remains, Nobuyasu Atago, a former Bank of Japan official who is now chief economist at Rakuten Securities Economic Research Institute in Tokyo. How the Takaichi administration responds to the warnings the market will send through yen depreciation and rising interest rates starting Monday is critically important."

Sanae Takaichi won a historic, postwar-era electoral mandate that gives her Liberal Democratic Party control of about two-thirds of parliament and a coalition poised for 75% of seats. She can pursue a nationalist agenda: strengthen the military, counter China and North Korea, deepen ties with the U.S., expand strategic investments, press companies to raise wages, and influence central bank decisions on interest rates. She can increase defense spending and cut the sales tax on food while claiming fiscal responsibility. Market response — yen depreciation and rising interest rates — poses a major constraint and will test market confidence.

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