Monetary-Policy

On 30 January 2026, President Trump nominated Kevin Warsh to succeed Jerome Powell as chairman of the Federal Reserve. The Senate confirmation process is underway, and Warsh is expected to take the chair when Powell’s term expires in May. Most Western coverage has focused on what this means for US rates and the dollar. Less discussed is what it might mean for Japanese equities, and why investors looking to diversify beyond an increasingly concentrated US market should be paying attention. ...

In the third week of January 2026, Japan’s 40-year government bond yield surged past 4% for the first time since the bond’s inception, eventually reaching 4.24%. The 10-year JGB yield hit 2.38%, its highest level in 27 years. It was the most violent sell-off in Japanese government debt in decades, and it sent shockwaves through bond markets in New York and London. If you are an American or European investor, you might have dismissed this as a local Japanese story. That would be a mistake. What happens in the JGB market affects your Treasury yields, your mortgage rate, and the stability of the global fixed-income market in ways that are not immediately obvious but are profoundly important. ...

Two reflationist academics, Toichiro Asada of Chuo University and Motohiro Sato of Aoyama Gakuin University, have been nominated to the Bank of Japan’s Policy Board. The market’s initial reaction was straightforward: the Takaichi government is signalling that it wants to slow rate hikes. The yen weakened, stocks rose, and long-dated bond yields steepened. A textbook reflationist repricing. But there is another way to read these appointments. And which reading proves correct has meaningful implications for how you position in Japanese equities. ...