Takaichi Win Sends Yen Plunging With Bonds as Stocks Jump

Lawmaker Sanae Takaichi’s near-certain elevation as Japan’s next prime minister roiled the nation’s financial markets as investors bet she will enact more stimulus.

The yen lost 1.8% against the dollar to past 150 and sank to an all-time low against the euro. Longer-term bonds fell on concern Takaichi’s policies will require more government spending and fan inflation. The 40-year yield surged as much as 17 basis points to 3.55%.

Her surprise victory in a ruling party leadership vote at the weekend reduced expectations that the Bank of Japan may hike interest rates as soon as this month, while raising worries about more debt supply to finance stimulus. Bond investors had been wary of fiscal spending even before Takaichi’s win, with opposition parties calling for tax cuts.