Market turmoil involving a weaker yen and rising long-term interest rates has continued amid warnings from the US Treasury secretary about an extraordinary situation in Japan, with the Bank of Japan's exit from monetary easing and the Takaichi administration's fiscal pledges emerging as the backdrop.
In coverage of market turmoil in Japan, the US Treasury secretary was reportedly said to have warned of an extraordinary situation in the country. Close scrutiny of the Bank of Japan's monetary policy and the impact of fiscally populist pledges have become subjects of discussion.
On 20 January 2026, the day after Prime Minister Sanae Takaichi (高市早苗) announced a policy of dissolving the House of Representatives, the 10-year Japanese government bond yield rose to 2.38%. While the yen weakened and long-term interest rates rose, there were also instances in which share prices continued to rise, although the market as a whole varied in how it responded to the warning signs.
Comparisons were drawn with the UK's Truss shock. Japan's fiscal policy also set out a similar tax-cutting approach, and it was reported that overseas investors had begun quietly selling Japan. Since the LDP leadership election, selling of government bonds and yen depreciation have become pronounced, creating a situation that cannot be halted by verbal intervention aimed at restoring yen strength alone.
The article concluded by saying that attention would focus on domestic and overseas reactions and subsequent reports, suggesting that international developments such as the AZEC summit could also be affected.