Japan stocks and the Japanese yen are moving in a way that rarely happens. A long-standing relationship between currency and equities has just flipped. That shift could matter far more than a short-term rally.
Alex Mason, known on X as @AlexMasonCrypto, pointed out that the correlation between the Japanese yen and the Topix stock index has turned positive for the first time since 2005. That detail may sound technical at first. It changes how capital flows behave inside one of the world’s largest economies.
Historically, Japan has followed a simple pattern. A weaker yen often supports Japan stocks. A stronger yen usually pressures equities. That relationship underpins the carry trade structure, where investors borrow in yen and deploy capital into risk assets.
The attached chart illustrates this clearly. It tracks the 1 year rolling correlation between the Japan Topix index and the JPYUSD exchange rate from 1995 through early 2026. Most of the chart sits below zero, which signals negative correlation. That means yen down and stocks up, or yen up and stocks down.
🚨 SOMETHING JUST BROKE IN JAPAN
— Alex Mason 👁△ (@AlexMasonCrypto) February 19, 2026
This almost never happens.
For the first time since 2005, the correlation between the Japanese yen and the Topix index just flipped positive.
That matters more than it sounds.
Historically, Japan works one way:
Yen down = stocks up.
Yen up =… pic.twitter.com/Fw8ma9maKt
The right side of the chart shows a sharp move above zero into positive territory around February 2026. The annotation reads “JPY up, Topix up.” That marks a rare moment where both the currency and equities rise together. This type of correlation has not appeared since the mid 2000s.
Positive Correlation Between Yen And Stocks Signals Capital Inflows
Alex Mason explains that over the last 12 months, the yen strengthened about 1% against the dollar. During the same period, Japanese equities rallied roughly 38%. Both rising together breaks the typical carry trade dynamic.
When a currency strengthens alongside domestic stocks, it often signals direct capital inflows. Investors are not simply chasing cheap currency. They are allocating into the equity market itself. Mason argues that this pattern tends to show up during structural bull markets rather than short-term trades.
Historical parallels reinforce that view. Japan, from 1982 to 1990 saw currency strength and equity gains align during its major expansion phase. Germany in the mid 80s and China in the early 2000s displayed similar conditions during sustained bull cycles.
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Japan holds a central role in global liquidity. A regime change in Japan stocks and currency behavior can ripple outward. Stronger domestic equities combined with a firmer yen can alter risk allocation across Asia and beyond.
Alex Mason notes that such correlation shifts are rare and meaningful. He emphasizes that when FX and stocks rise together, global capital may be choosing the market as a destination, not merely a funding source.
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