The shift in global order from unipolarity to multipolarity is systematically reshaping the pricing logic of major global asset classes.
Recent election results in Japan, reported on February 9th, showed the ruling coalition securing a majority of seats in the lower house. In a previous analysis of potential geopolitical "black swans" for 2026, "strategic adventurism by opportunistic actors in the Asia-Pacific region" was identified as a significant risk.
Since the start of the year, significant volatility has been observed in Japanese capital markets, with both the yen and Japanese Government Bonds (JGBs) weakening, indicating a notable reduction in the yen's traditional safe-haven status. While recent government intervention has temporarily calmed market sentiment and shown signs of stabilization, the underlying structural changes affecting the yen and JGBs cannot be solely attributed to short-term economic fluctuations. These changes are better understood within a broader narrative: the profound evolution of the global order from unipolarity to multipolarity, which is systematically reshaping the fundamental pricing logic of global assets. The volatility in Japanese assets is a specific manifestation of this shifting logic.
Japan's geopolitical role can be divided into two distinct phases since World War II:
The first phase, during the Cold War era (post-WWII until the dissolution of the Soviet Union), positioned Japan as the "bridgehead" for the United States in Asia. During this period, Japan served as a crucial strategic pivot for U.S. influence in the region, fulfilling at least three key roles. Initially, it acted as a supply base, extending U.S. industrial production chains to support military activities in Asia. As the Cold War intensified, Japan became a showcase for Western capitalist values and development models, aiding U.S. strategic objectives. In the later stages of the Cold War, when the U.S. was on the defensive against the Soviet Union, measures such as the Plaza Accord, financial liberalization, and trade restrictions were used to extract economic benefits from Japan, thereby bolstering U.S. bargaining power.
The second phase, the unipolar order period (post-Soviet collapse), saw Japan's geopolitical value shift primarily to the financial domain. With the establishment of a unipolar world, Japan's importance as an industrial and military supply base relatively declined. However, the economic system Japan developed under U.S. patronage post-WWII, having lost the capacity for direct competition with the U.S., ironically saw its security enhanced. Furthermore, with reduced resistance, the U.S. had a stronger inclination to profit globally through financial capital. Japan, having accumulated substantial capital, became a capital-rich nation. Its prolonged low-interest-rate environment provided U.S. capital with a stable leverage tool. In return, Japanese capital shared in the developmental dividends of global markets, particularly in emerging economies, alongside American and European capital.
In essence, under the previous unipolar order, Japan's geopolitical role allowed it to enjoy the dual benefits of a low-risk environment and stable capital returns. This was the fundamental underpinning for the long-standing perception of the yen and JGBs as "safe-haven assets."
Under the emerging multipolar order, this logic is beginning to change.
U.S. strategic retrenchment is reducing its reliance on Japan as a leverage tool. Following the Soviet Union's collapse, the global expansion of U.S. capital was closely linked to its soft power, which in turn relied on the dollar's centrality and U.S. military strength. However, the decline of U.S. hard power is a reality, and its soft power is also waning. Recent attempts by the U.S. to acquire foreign assets through coercive measures and military deterrence cannot obscure the fact that the pace of its external asset expansion is slowing, as indicated by the ratio of U.S. external assets to GDP. In this context, the U.S. demand for leveraging Japan to support its capital expansion is likely diminishing.
Simultaneously, U.S. strategic retrenchment in Asia is pushing Japan to the geopolitical forefront. The "strategic contraction" evident in U.S. national security strategy provides space for right-wing forces in Japan to advance "political normalization," increasing their motivation for strategic gambits and testing boundaries. Such actions risk destabilizing the regional security environment established since the Sino-Japanese Peace and Friendship Treaty, placing Japan back on the front lines of geopolitical competition and thereby undermining the foundational logic of its assets' safety.
While Japanese government intervention may stabilize market sentiment in the short term, the medium-term foundations for the yen and JGBs remain fragile. Guidance from Japanese authorities can temporarily smooth market volatility and alleviate liquidity pressures. However, these measures cannot fundamentally reverse the asset logic transformation driven by the shift in Japan's geopolitical role. As long as Japan remains positioned at the forefront of major power competition, a geopolitical risk premium will persist in its assets. This premium may even amplify with fluctuations in regional tensions, making it difficult for the yen and JGBs to regain their former stable "safe-haven" status.
The disintegration of the unipolar order and the progression towards multipolarity will continue to influence global financial markets in the medium term. The "de-securitization" trend of Japanese assets is a specific microcosm of the multipolar narrative playing out in global finance. As the U.S. pursues strategic retrenchment across different regions, it aims to maximize its own interests: seeking territorial gains in Europe, direct resource acquisition in the Americas, and attempting to use Japan's potential adventurism to increase its bargaining chips in Asia. In the short term, the U.S. may try to alleviate its own challenges through these methods, which could intensify a "circle-shrinking" effect within developed economies. However, in the long run, the macro trends of global capital and growth pivoting towards emerging markets, alongside the diversification of international monetary and financial systems, are difficult to reverse. These forces will continue to reshape the underlying logic of global asset pricing.