Executive Summary

• This report outlines select major global events and policy developments that we are monitoring through the 2026 midterms.
• We discuss each event, provide commentary on implications for credit spreads and market sentiment, and identify which markets are most ‘in play.’

This report outlines select major global events and policy developments that we are monitoring through the 2026 midterms. We discuss each event, provide commentary on implications for credit spreads and market sentiment, and identify which markets are most ‘in play.’

Feb. 18 – July 17, 2026: Japan’s Special Diet Session

Japan’s Lower House election on Feb. 9, 2026 resulted in a landslide victory for the ruling coalition, the Liberal Democratic Party (LDP) and the Japan Innovation Party (JIP), which secured a supermajority of over two-thirds of the seats. A supermajority allows a bill to be passed even if it is rejected by the Upper House as the bill can be sent back to the Lower House and enacted if it is passed again by two-thirds. As a result, it gives the LDP and PM Takaichi greater flexibility to implement its expansionary fiscal agenda despite still falling short of a majority in the Upper House.

A Special Diet Session is held from Feb. 18 to July 17, 2026 as required by the Japanese Constitution to reset political leadership after the Lower House election. The Session includes the deliberation of the FY2026 budget as well as the replacement of Bank of Japan (BOJ) board member Asahi Noguchi, whose term will end on 31 Mar 2026. Noguchi is broadly viewed as dovish and supports gradual policy normalization.