Sudden Chaos in Japan’s Bond Market Puts Stock Bulls on Notice

From the start of the year, Japanese stocks surged on bets that Prime Minister Sanae Takaichi would cement power through a snap election and then ramp up spending. Then on Tuesday, the so-called Takaichi trade unraveled.

A bond slump that sent yields soaring to records on her election pitch to cut taxes on food rippled through markets in Tokyo, spurring a two-day decline in the benchmark Topix that was its biggest since mid-November. And while markets somewhat stabilized toward the end of the trading week, the Topix still finished with a weekly decline, trailing a broader gauge of Asian shares.