Earlier this year, Japanese equities celebrated a milestone: A meteoric rally in local shares finally pushed the Nikkei 225 beyond its late-1989 highs to a new record.

It was “FOMO,” yes, but there was a fundamental case too. I’ll recycle some color from my previous coverage. The Japanese economy, optimists hope, has finally exorcized the deflation demon, and with valuations reasonable (even after the run-up), corporate fundamentals generally sound and the yen historically weak, the sky’s the limit. That’s the narrative.

The Nikkei’s up 140% since the COVID lows. Until the most recent sprint higher for US tech shares, Japan’s benchmark was keeping pace with the Nasdaq 100 when measured since the March 2020 nadir. That gives you some context for the scope of the rally.

On Thursday, the Topix — the “other” Japanese benchmark — hit a new record, eclipsing its own 1989 peak.

The Topix milestone speaks to a rally that’s broader. Indeed, one Nomura strategist suggested on Thursday that it’s just now accurate to say Japanese stocks are at record highs. The Nikkei hit another record as well.

The story hasn’t really changed. The overarching narrative still revolves around the idea that the Japanese economy’s emerging from a decades-old struggle with deflation and that local shares are attractive, both on a relative and absolute basis. The country’s aggressive effort to improve corporate governance is another bullish driver.

And then there’s the yen. A weak currency’s a boon to exporters, obviously, but successive bouts of depreciation have markets on edge for intervention. That adds an element of unpredictability to the whole thing. There’s palpable concern that the yen’s now too weak for comfort.

The BoJ’s engaged in a careful effort to dismantle the world’s most extensive experiment in ultra-accommodative monetary policy, but it’s a halting affair, and a glacial process besides.

The resilience of the US economy and the attendant delay in the onset of a Fed easing cycle, have meant rate differentials still overwhelmingly favor the dollar, as illustrated above.

In any case, the Topix record bears mentioning. And, as noted here earlier this year, records for Japanese equities rob bears of a long-standing snarky rejoinder. For decades, the assertion that stocks go up over time was refutable by reference to Japanese stocks. No more.

Of course, most investors don’t want to wait a quarter century for new records.