Overview

• The PLD and the Japan Innovation Party finalized their coalition agreement on Monday in Tokyo, confirming plans to form a governing bloc.
• The new alignment leaves the bloc two seats short of an absolute majority, with rules allowing a likely second-round win in Tuesday’s parliamentary vote.
• Negotiators agreed to pursue JIP priorities, including cutting the consumption tax on food to zero and reducing the number of Diet seats.
• No ministerial portfolios are expected for JIP members, though Takaichi may appoint a JIP figure as a special adviser, according to TV Asahi.
• Tokyo stocks surged more than 3% on the news, lifting the Nikkei to a record above 49,000.