Since Japanese leader Sanae Takaichi called a snap election for February 8, currency and debt traders have gotten busy registering "no" votes.

It's rarely flattering when expectations that your party will win a contest send the currency lower and bond yields to three-decade highs. The yen is on the cusp of 160 to the US dollar and likely headed even lower.

Ten- and 20-year government bond yields are the highest since 1999, while 40-year rates of 4% are the highest for any Japanese maturity since at least 1995.

On the surface, investors will say this reflects Prime Minister Takaichi's weak-yen strategy. She's made no mystery of her desire to ramp up government spending and prod the Bank of Japan not to raise rates on Friday (January 22) or for the foreseeable future.

Below it, we're arguably talking about the economic bigotry of low expectations. Everyone just assumes — and not without justification — that Takaichi, despite being a popular Japanese leader, is going to do the bare minimum to raise the nation's economic game. Instead, bond traders are betting Takaichi will reopen the fiscal floodgates in ways sure to draw the attention of credit rating companies.

Takaichi is, after all, dusting off the growth strategy of her mentor, Shinzo Abe. This means global investors have valid reasons to worry she will prioritize increased government spending, ultralow rates and a weaker yen over cutting bureaucracy, modernizing labor markets, incentivizing innovation, narrowing the gender-pay gap and luring more global talent Tokyo's way.

The problem is that "Takaichi is running on an end to excessive fiscal austerity – that's highly irresponsible," says Robin Brooks, economist at the Brookings Institution. "I've been flagging for a long time that we're in the early stages of a global debt crisis. Long-term government bond yields have risen sharply everywhere. Markets are losing patience with governments that are chronically unable or unwilling to bring public debt down. This is no time to pretend Japan's humongous debt isn't a problem. Denial isn't a plan."

Denial, it seems, is indeed the plan. This, not surprisingly, led the so-called "bond vigilantes" to let Team Takaichi know that the same-old-same-old fiscal and monetary pump priming no longer plays.

Not with Tokyo's debt-to-GDP ratio of 260% and its population aging and shrinking faster than any other major economy. In 2025, Japan saw the lowest number of births since 1899 and the highest debt-servicing costs ever, hardly an upbeat combination.

All this has markets buzzing about a possible "Liz Truss moment" in Japan. "The dynamics," says Jeroen Blokland, founder of the Blokland Smart Multi-Asset Fund, "are starting to look uncomfortably similar to those in the UK in 2022, when then–Finance Minister Kwasi Kwarteng and Prime Minister Liz Truss – who would go on to become the shortest-serving UK prime minister in modern history – announced an unfunded tax cut package."