Core Viewpoint - Japan's Nikkei 225 index reached an all-time high, driven by optimism surrounding government spending and monetary policy following the election of Sanae Takaichi as the new leader of the ruling Liberal Democratic Party [1][2]. Market Reaction - The 30-year Japanese government bond yield hit a record high, while the two-year note yield decreased due to expectations of delayed rate hikes by the Bank of Japan [3]. - The yen experienced a moderate decline against the U.S. dollar and reached historic lows against the euro [3]. Political Context - Takaichi is perceived as the most expansionist candidate, succeeding the hawkish Prime Minister Shigeru Ishiba, which contributed to the surge in the Nikkei index [4]. - Takaichi's agenda includes enhancing investment in strategic sectors such as artificial intelligence, semiconductors, nuclear fusion, and defense [5]. Investment Opportunities - The rally in Japanese equities is expected to increase demand for Japan-focused large-cap ETFs, particularly in a falling yen environment, which benefits export-oriented companies [7]. - Specific ETFs poised to gain include WisdomTree Japan Hedged Equity Fund (DXJ), Xtrackers MSCI Japan Hedged Equity ETF (DBJP), and iShares Currency Hedged MSCI Japan ETF (HEWJ), with DXJ rising 2.8% on October 6, 2025 [8]. - ProShares UltraShort Yen (YCS) gained 3.8% on the same day, while the Invesco CurrencyShares Japanese Yen Trust (FXY) fell by 1.9% due to expectations of easier monetary policy [9].