Japanese shares are expected to rise with Sanae Takaichi set to lead the ruling party. Nikkei hits record high at 45,769.50. Short positions on the gauge may be unwound, potentially pushing index towards 47,000 level. JGB market on edge since May with waning demand, decreased central bank support, and swelling debt.

Takaichi’s win seen as positive surprise for stocks but negative for bonds. Currency closes at 147.44 per dollar. She aims for demand-driven inflation backed by rising wages and corporate profits. Shorter-dated JGB yields rise on evidence of sound economy. BOJ could raise rates as early as this month’s meeting.

Takaichi’s support among LDP members could influence BOJ monetary policy. Yields on two-, five-, and 10-year JGBs at levels not seen since 2008. Takaichi may make it difficult for BOJ to raise rates, leading to lower yields but also negative for bonds. A steepening of the yield curve is possible.

Read more at Yahoo Finance: Japan’s Nikkei seen hitting new highs as yen, bonds sputter on Takaichi victory