After Takaichi Sanae (高市早苗) won, the yen weakened by more than ¥10 against the US dollar from October 2025 onward, while the Nikkei 225 rose by more than 20,000 points. Market activity indicates unusual changes in hedge funds’ reflation-trade positions.
Since October 2025, when Takaichi Sanae (高市早苗) won the LDP leadership election, the yen has weakened by more than ¥10 against the US dollar, while the Nikkei 225 has risen by more than 20,000 points. The combination of a weaker yen and higher stock prices has continued to appear solid on the surface. Some believe these moves will alter the flow of funds in the market.
Meanwhile, unusual changes have emerged in the positions of hedge funds and others. Some observers say that a longstanding reflation-trade strategy, in which investors combine sales of Japanese government bonds and the yen with stock purchases against a backdrop of economic recovery and rising inflation, is beginning to falter.