Foreign residents in Japan are witnessing significant financial market volatility as Prime Minister Takaichi's administration pursues an aggressive fiscal expansion policy, raising concerns about the country's economic stability and potential impacts on daily life. On November 18, 2025, Japanese financial markets experienced substantial turbulence across multiple sectors. The Tokyo Stock Exchange saw the Nikkei index plunge by over 1,600 points, falling below the psychologically important 50,000-point threshold, according to NHK. Simultaneously, the yen weakened in foreign exchange markets, and long-term interest rates surged to levels not seen in nearly two decades. The market disruption stems from growing unease about the Takaichi administration's commitment to "active fiscal policy." A Liberal Democratic Party caucus advocating for "responsible active fiscal policy" formally requested that Prime Minister Takaichi approve a supplementary budget of approximately 25 trillion yen, as reported by NHK. This massive spending package aims to address inflation, crisis management investments, and defense capabilities enhancement. The bond market's reaction has been particularly dramatic. The yield on 10-year Japanese government bonds temporarily reached 1.75 percent on November 18—the highest level since 2008, according to NHK. Rising government bond yields typically indicate investor concerns about fiscal sustainability and inflation risks. For expats, higher interest rates could eventually translate to increased borrowing costs for mortgages and personal loans, though they may also benefit savers through higher deposit rates. Finance Minister Katayama acknowledged the market concerns, stating that the government is "carefully monitoring financial market trends" and ensuring that "the credibility of government bonds is not significantly undermined" while finalizing the scale and quality of economic measures, NHK reported. This statement suggests authorities recognize the delicate balance between stimulating the economy and maintaining fiscal discipline. The government's economic package includes several measures directly affecting residents' daily expenses. According to NHK, the administration plans to expand subsidies to local governments for inflation countermeasures. Proposed measures include "rice vouchers," electronic coupons for food purchases, and water bill reductions. These initiatives aim to ease the burden of persistent price increases that have affected household budgets across Japan, including those of foreign residents. The stock market decline wasn't solely attributable to domestic policy concerns. NHK reported that reduced expectations for U.S. Federal Reserve interest rate cuts and deteriorating Japan-China relations also contributed to investor pessimism. However, the timing and severity of the market reaction underscore how fiscal policy uncertainty can amplify existing concerns. For expats living in Japan, these developments carry several practical implications. First, currency fluctuations affect those sending money abroad or receiving income in foreign currencies. A weaker yen reduces purchasing power for imported goods and international travel but benefits those earning foreign currency. Second, if inflation persists despite government intervention, household budgets may face continued pressure despite subsidy programs. The debate over fiscal sustainability also raises longer-term questions about Japan's economic trajectory. With government debt already among the highest in developed nations relative to GDP, aggressive fiscal expansion without clear revenue sources could eventually necessitate tax increases or spending cuts in other areas, potentially affecting public services that foreign residents rely upon. Expats should monitor how their local municipalities implement the forthcoming economic measures, particularly food and utility subsidies. While some benefits may be automatically applied, others might require applications or registration. Checking with local government offices or English-language information services will be essential to access available support. As the Takaichi administration finalizes its economic package in the coming weeks, market participants and residents alike will be watching closely to see whether the government can balance its growth ambitions with fiscal prudence, and whether proposed relief measures effectively reach households struggling with inflation.