The latest Market Talks covering FX and Fixed Income. Published exclusively on Dow Jones Newswires throughout the day.

2138 ET - The ruling Liberal Democratic Party's election victory is expected to lead to a further strengthening of high-pressure economic strategies, BNP Paribas economists say. "While cautious views regarding a consumption tax cut persist within the LDP, the likelihood of its implementation has likely risen significantly in light of the election results," they write in a note. Given that the prime minister has publicly committed to realizing the tax cut within fiscal 2026 and secured a landslide victory, the government will likely move quickly to implement the measure while remaining mindful of market stability, they say. The LDP's victory will also likely make it easier for the Takaichi administration to implement the defense spending increases requested by the U.S, they add. (megumi.fujikawa@wsj.com)

2133 ET - The election win by Japan's ruling party is likely to influence the speed and magnitude of policy actions, says T. Rowe Price's David Clewell in a note. The win is more about the robustness of the government mandate rather than a large policy pivot, given the ruling party's decadeslong strength. The result was largely priced in by the market, but there is a risk that longer-dated Japanese government bond yields will rise unless Prime Minister Sanae Takaichi pushes back on policies to reduce consumption taxes on domestic staples, the associate portfolio manager says. Japanese equities have long-term investment potential thanks to improving growth dynamics, corporate reform and reflation. He sees JGBs and the yen as short-term trading assets or funding sources given current trends in Japan. (megan.cheah@wsj.com)

2128 ET - The yen strengthens against most other G-10 and Asian currencies in Asian morning trading amid reports of Japanese authorities' foreign-exchange warnings. Atsushi Mimura, Japan's vice finance minister for international affairs and its top currency diplomat, on Monday said authorities are closely monitoring forex developments with a high sense of urgency, according to media reports. Mimura's remarks follow reports on Sunday that Finance Minister Satsuki Katayama said she will communicate with financial markets the next day, if needed, to maintain stability in USD/JPY movements. USD/JPY falls 0.2% to 156.84 and AUD/JPY drops 0.2% to 110.10, LSEG data show. (ronnie.harui@wsj.com)

2111 ET - Indonesia's GDP growth is expected to edge up to 5.3%-5.4% in the coming quarters, after hovering near 5% for much of the past decade, BofA economists Kai Wei Ang and Rahul Bajoria say in a note. They attribute the improvement to stronger implementation of the nutrition meal program, which is expected to provide more immediate support to growth in 2026. Still, considerable economic slack persists, with subdued domestic demand, soft micro, small and medium enterprises loan growth and weak wage gains. Against this backdrop, Bank Indonesia could lower the policy rate by a further 75 bps to 4% this year to support more sustainable growth, subject to comfort over rupiah stability, they add. Attention will stay on policy developments in near term, including discussion on the Financial Sector Omnibus Law, BofA adds. (yingxian.wong@wsj.com)

2104 ET - Thailand's election result does little to change its challenging economic outlook, although it should help reduce near-term political risk, Capital Economics' Gareth Leather writes in a note. The election delivered a surprising victory for Prime Minister Anutin Charnvirakul and his Bhumjaithai Party, making it almost certain that he will remain in office, Leather notes. However, Thailand's near-term outlook remains weak. Consumption is weighed heavily by exceptionally high household debt, while its growth rate is among the lowest regionally. The next government's real test is whether it can move beyond short-term political populism and start tackling deeper constraints holding back Thailand's long-term growth, Leather says. (amanda.lee@wsj.com)

2102 ET - Fiscal implications of Japan's ruling coalition's landslide win in Sunday's lower-house elections are unlikely fully priced by USD/JPY, says Goldman Sachs's Karen Reichgott Fishman in a research report. "A bigger mandate is likely to fuel concerns about the potential path of spending plans, warranting renewed weakness in JGBs and the yen, unless the BOJ were to shift towards faster rate hikes," she says. USD/JPY will likely move toward and through 160 as markets digest the impact of the election results and the mandate for PM Sanae Takaichi, the analyst says. However, "the move may be short-lived or even short-circuited if authorities push back through rate checks or actual intervention," she adds. USD/JPY falls 0.5% to 156.38, LSEG data show. (ronnie.harui@wsj.com)

2052 ET - The landslide victory by Japan's ruling Liberal Democratic Party may eventually reshape its relationship with its coalition partner, Daiwa Securities' analysts say in a note. While the cooperative stance between the two is unlikely to shift in the near future, the Innovation Party's strategic leverage could diminish over time, they say. "In the medium-to-long term, the Innovation Party's positioning may shift," the analysts say. "As the LDP's reliance on other parties decreases in the Lower House, scenarios may arise where the Innovation Party's policy demands are no longer fully reflected."(megumi.fujikawa@wsj.com)

2035 ET - Thailand's clear election outcome will remove any near-term political overhang on its economic growth, OCBC economists write in a report. The Bhumjaithai Party is set to win 194 of the 500 seats in the lower house elections, the economists note. Although the party didn't win an outright majority, its leader Anutin Charnvirakul declared victory. The Bhumjaithai Party ran on a political manifesto to lower the cost of living and deliver GDP growth of 3% or so annually. "Economic policies can turn for the better under a stable, durable government allowing the authorities to pursue much needed structural reforms to lift medium-term economic growth," OCBC says.(amanda.lee@wsj.com)

2021 ET - Japan's Prime Minister Sanae Takaichi is now positioned for a long-term stay in office, following a big election win, says SMBC Nikko Securities economist Koya Miyamae. Her administration could potentially last until the 2030 general election deadline or at least until two of the Liberal Democratic Party leadership races, he adds. The LDP has secured a standalone two-thirds supermajority in the Lower House, granting it the power to override the Upper House and re-pass rejected bills. "Following this historic landslide victory, Prime Minister Takaichi's intra-party influence is set to surge," Miyamae says. "In the near term, factional infighting is unlikely to impede her leadership, giving her a clear mandate to advance her policy agenda."(megumi.fujikawa@wsj.com)

2008 ET - Japanese LDP's landslide win in Sunday's lower-house election paves the way for fiscal expansion, says Ayako Fujita of J.P. Morgan's Japan Economic Research in a note. The election result can be perceived as a public endorsement of the Takaichi administration's "responsible and proactive fiscal policy," the economist says. "While the public's main concern appears to be fiscal expansion as a measure against rising prices, PM Takaichi seems to prioritize allocating fiscal resources to strategic investment areas rather than focusing solely on a consumption tax cut," she says. "The advocated fiscal expansion is likely to proceed," Fujita adds. (ronnie.harui@wsj.com)

1946 ET - The yen strengthens against most other G-10 and Asian currencies in early trade on likely position adjustments. The baseline scenario of Japanese LDP's win in Sunday's lower-house elections is mostly priced in by FX markets, says CBA's Global Economic & Markets Research team in a research report. The LDP's "large majority means she does not have to compete with other parties with large promises on social spending and tax cuts," the team says. PM Takaichi "could choose to not 'play chicken' with financial markets by paring back budget stimulus," the team says. "This alternate scenario is not priced: JPY would strengthen and bond yields fall," the team adds. USD/JPY falls 0.2% to 156.82 and AUD/JPY is down 0.1% at 110.17, LSEG data show. (ronnie.harui@wsj.com)

1933 ET - Will Japan's election outcome herald another round of fiscal loosening? PM Takaichi passed a large supplementary budget in November, followed just two months later by a pledge to suspend the sales tax on food for two years. That rapid-fire fiscal expansion contributed to the sell-off in Japanese government bonds in mid-January. Still, Marcel Thieliant, head of Asia Economics at Capital Economics, says he views the recent fiscal expansion as an attempt to bolster public support ahead of the election rather than as a sign of things to come. With Upper House elections not due until 2028, he doesn't don't expect any further major fiscal loosening. (james.glynn@wsj.com; X @JamesGlynnWSJ)

(END) Dow Jones Newswires

February 08, 2026 21:39 ET (02:39 GMT)

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