Dramatic Victory For Takaichi, Beijing Cautions On U.S. Treasuries, And Starmer's Woes Persist

2026-02-09 08:35:00 ET

There are three important developments. First, Japan’s Prime Minister Takaichi led the LDP to a landslide victory that secured a 2/3rd “super majority” that is understood as a powerful mandate and provides an opportunity to change the constitution. While JGBs were sold and Japanese equities bought, after some initial volatility, as many anticipated, the yen has defied expectations and strengthened. Second, Chinese officials have recently moved to discourage financial institutions from buying more Treasuries. Apparently, it was justified on risk management grounds rather than geopolitics. And it may have begun in recent weeks rather than the past couple of days. Third, UK Prime Minister Starmer’s chief of staff resigned over the Mandelson appointment, but it is not clear that it has taken off the pressure from Starmer....

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