Japan's 30-year government bond yields surged to a record 3.88% on January 20, before pulling back -32 basis points as markets priced in the expected Liberal Democratic Party (LDP) win.

Now with the LDP controlling 2/3 of parliament, Takaichi will have more freedom to increase defense spending and cut the sales tax on food, but her main opposition may come from the markets.

This comes as Japan's debt burden is already the largest in the developed world, at ~230% of GDP.

Investor concerns are growing that Takaichi, armed with a supermajority, could expand stimulus ambitions, putting further upward pressure on yields and downward pressure on the Yen.

If bond yields continue to rise in Japan, fiscal instability fears could again push investors into gold.

Japan should be now more watched than ever.