Japanese stocks jumped nearly 2% and the yen climbed 0.6% to ¥161.36 after Finance Minister Satsuki Katayama urged domestic pension funds and households to shift more assets into Japanese markets.

She explicitly named the Government Pension Investment Fund, which oversees a $1.8tn portfolio split evenly between foreign and domestic bonds and equities. The fund last set its strategic allocation this year, locking the current weights through 2030, and Katayama noted any change would require broader government agreement.

The market reacted instantly: the Nikkei 225 added 1.8% (up 73% over the past year) and 10‑year JGB yields fell 0.1 percentage point to 2.77%. Analysts at RBC Capital Markets said a rotation by Japanese investors would be “the impulse the yen needs to strengthen,” while State Street’s Masahiko Loo called the signal a “smart policy signal” that could support the currency more durably than direct FX intervention.

If the GPIF follows through with a reallocation toward domestic assets, the yen could sustain its gain and Japanese borrowing costs may stay suppressed, giving the government more fiscal room amid a 1% policy rate from the Bank of Japan.