Stock investors have welcomed Japanese Prime Minister Sanae Takaichi’s decisive re-election this week, with the Nikkei surging to record highs. But her promises on public spending and tax cuts have also put currency and debt markets on edge. Here’s our take on what the “Takaichi Trade” really means – and whether you should partake in it. What Is the “Takaichi Trade”? The “Takaichi Trade” refers to a weakening yen, a rising stock market in Japan, and increasing yields (i.e. falling prices) on Japanese government bonds (JGBs), as markets expect more growth-oriented spending from the Sanae Takaichi administration’s “proactive” fiscal policy. It took off late last year when Takaichi campaigned for office, and has returned with her resounding re-election. Takaichi’s agenda includes temporary consumption tax cuts on food (worth US$32 billion annually), increased defence spending, and investments in semiconductors and artificial intelligence. Analysts at MUFG estimate the tax exemption alone would boost GDP by 0.5%....