A Politically Driven Market, With Rising Risks of Overheating in Equities and Other Risk Assets
分析と予測

A Politically Driven Market, With Rising Risks of Overheating in Equities and Other Risk Assets

14 1月 2026, 10:23
Masayuki Sakamoto
Masayuki Sakamoto
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A Politically Driven Market, With Rising Risks of Overheating in Equities and Other Risk Assets

Since the start of the year, the FX market has taken on a fully “political market” character.
At the center of this is President Trump’s behavior and policy stance.

Domestically in the U.S., pressure on the Fed Chair has intensified, to a degree that can be described as shaking the very independence of the central bank. This has led to growing awareness of:

  • A decline in confidence in the United States

  • Selling of U.S. Treasuries (higher yields)

  • Selling of the U.S. dollar

At times, this chain reaction has clearly emerged in market pricing.

At the same time, on the external front, geopolitical risks are expanding:

  • Following the Venezuela issue,

  • Signals of interference in Iran’s internal affairs,

  • A hardline diplomatic posture that does not rule out military action.

These factors can also generate:

Risk-off sentiment → Safe-haven buying of the USD

As a result, the market is trapped in a highly unstable structure where
both “USD-selling forces” and “USD-buying forces” coexist simultaneously.

◆ Another Form of Overheating: Stocks and Precious Metals

Global equity markets remain firm:

  • Prices continue to aim higher, even with intermittent corrections

  • AI-related stocks remain popular

  • Resource and materials stocks are also strong

In addition:

  • Gold and silver prices are surging

  • Driven by both safe-haven demand and tightening supply of rare metals

Across the market as a whole:

Risk aversion and risk appetite are advancing at the same time
→ A clear sense of overheating is beginning to spread

This contradiction itself is a warning sign.

◆ The Yen Market Has Its Own Political Color: “The Takaichi Trade”

The yen is becoming even more politically driven.

Speculation is intensifying that Prime Minister Takaichi will move toward an early dissolution of the Lower House and call a general election. Some reports suggest this could even be announced as early as tonight.

As a result:

  • Japanese equities are being bought on the “Takaichi trade”

  • USD/JPY is pushing closer to the 160 level

Finance Minister Katayama stated that:

“We are working closely with U.S. Treasury Secretary Bessent.”

However, despite USD/JPY approaching 160:

Market awareness of the risk of FX intervention remains surprisingly low.

◆ The Nature of a Political Market: Sentiment Can Flip Instantly

The defining feature of a political market is this:

One comment or one headline can flip market sentiment by 180 degrees.

In particular:

  • Geopolitical risks

  • Issues surrounding central bank independence

  • Hints of FX intervention

All have the power to instantly destroy fear-driven positioning.

It is therefore natural to assume:

High volatility conditions are likely to persist.

◆ U.S. Economic Data Later Today

(Likely Secondary in a Political Market)

A heavy slate of U.S. data is due:

  • MBA Mortgage Applications (Jan 3–9)

  • Retail Sales (Nov)

  • Producer Price Index (PPI) (Oct & Nov)

  • Current Account (Q3 2025)

  • Business Inventories (Oct)

  • Existing Home Sales (Dec)

However, as seen in yesterday’s muted reaction to CPI:

Political headlines are currently dominating the market more than economic data.

◆ Speaking Events: Central Bank Independence in Focus

A series of central bank officials are scheduled to speak:

  • De Guindos (ECB Vice President)

  • Taylor (BoE MPC member)

  • Paulson (Philadelphia Fed President)

  • Miran (Fed Governor)

  • Ramsden (BoE Deputy Governor)

  • Bostic (Atlanta Fed President)

  • Kashkari (Minneapolis Fed President)

  • Williams (New York Fed President)

Yesterday, led by the ECB, an unusual joint statement was released:

Expressing support for the Fed Chair and defending central bank independence.

Today’s speeches may therefore:

Trigger sensitive market reactions within the context of central bank independence.

◆ Political News (Japan)

Suzuki, the LDP Secretary-General, stated:

Prime Minister Takaichi has conveyed her intention to dissolve the Lower House early during the regular Diet session.
The party is accelerating preparations for an election.

This signals that the political market has entered a real and actionable phase.

◆ London FX: Yen Buying Takes the Lead

In early London trading, yen buying intensified.

Finance Minister Katayama strongly warned against excessive yen weakness, stating:

  • “A rapid weakening of the yen does not reflect fundamentals.”

  • “We will not rule out any measures.”

  • “We are deeply concerned and regret the situation.”

Following these comments:

  • USD/JPY

    • Tokyo high: 159.45

    • Fell to: 158.87

    • Remains heavy

    • Low: 158.84

Yen buying is currently dominating price action.

🔎 Overall Summary

  • The market is now completely a politically driven market

  • Trump administration actions, pressure on the Fed, and geopolitical risks are the main drivers

  • Overheating is emerging simultaneously in equities and precious metals

  • The yen is moving on the “Takaichi trade”

  • Even near 160, intervention risk is priced surprisingly low

  • This is a dangerous environment where sentiment can reverse instantly


#Takaichi