“黑天鹅”突袭！刚刚，大跳水！

Core Viewpoint - The recent decision by Japan's Komeito party to exit the ruling coalition with the Liberal Democratic Party (LDP) introduces significant uncertainty into Japan's political and legislative agenda, despite the likelihood of Sanae Takaichi becoming the next Prime Minister [1][6]. Political Developments - Komeito has confirmed its withdrawal from the ruling coalition but will continue to cooperate with the LDP on certain issues [3][4]. - The breakdown of negotiations between Komeito and the LDP was primarily due to disagreements over the regulation of political donations from corporations and groups [4]. - Komeito's leader, Tetsuo Saito, indicated that without a joint governance agreement, Komeito would not support Takaichi in the upcoming Prime Minister election [4][6]. Market Reactions - Following the announcement, the USD/JPY exchange rate fell sharply, dropping nearly 0.5%, while the Nikkei 225 futures experienced a significant decline, falling over 1200 points and ultimately closing down 2.42% [1][4]. - The broader Japanese stock market also saw declines, with the TOPIX index dropping by 1.85% and the Nikkei 225 index down by 1.01% [4]. Implications for Governance - The dissolution of the coalition is expected to weaken Takaichi's legitimacy and authority as Prime Minister, despite the LDP remaining the largest party in both houses of the Diet [6][7]. - The LDP and Komeito coalition, which has been a cornerstone of political stability for nearly 25 years, is now considered defunct, marking the end of a long period of stability [6][7]. - The LDP currently holds 196 seats in the House of Representatives and 100 seats in the House of Councillors, while Komeito holds 24 and 21 seats, respectively [7]. Future Legislative Challenges - The loss of Komeito's support will complicate Takaichi's ability to push through budget proposals and legislation in the Diet, leading to potential legislative gridlock [7]. - Analysts suggest that the weakened position of the LDP could result in increased chaos within the Diet, as the party struggles to maintain control over its political agenda [7]. Economic Policy Outlook - Takaichi's economic policies are expected to lean towards maintaining loose monetary policy and advocating for active fiscal measures, which may exert downward pressure on the yen [8]. - The anticipated fiscal expansion under Takaichi's leadership could support economic growth but may also exacerbate Japan's current inflation challenges [8].