TOKYO: Japanese stocks and bond yields soared and the yen fell on Monday (Oct 6), after conservative China hawk and potential big-spender Sanae Takaichi won the leadership of the ruling party.Takaichi, likely to become prime minister this month, has in the past backed aggressive monetary easing and expanded government spending, echoing her mentor, former premier Shinzo Abe.However, she toned down on these "Abenomics" calls during the campaign to head the ailing Liberal Democratic Party and replace Prime Minister Shigeru Ishiba.After winning the top job on Saturday, Takaichi pledged first to implement measures to address inflation and boost the economy, rural areas and primary industries such as farming and fisheries.Takaichi "looks more inclined than the others to juice the economy", said Taro Kimura at Bloomberg Economics."Still, with inflation rising and long-term (bond) yields climbing, she will have to balance her stance with reality, in order not to accelerate cost-of-living squeeze and jolt the rate market," Kimura said.The Nikkei 225 index of blue chips was up almost 5 per cent in afternoon trade while the yen fell against the dollar to 150.32 yen and hit a new record low against the euro.Yields on 30-year Japanese bonds also rose sharply, reflecting fears that the country's already colossal debts – over 200 per cent of GDP – will balloon further under Takaichi.The Bank of Japan has kept interest rates unchanged since January and Takaichi's appointment has thrown some doubt on when it might next hike them.Marcel Thieliant at Capital Economics, however, stuck to his prediction that the BoJ will increase rates this month."No government has tried to openly influence the BoJ's decision-making in more than two decades and any attempts to do so are unlikely to be successful," he said."If anything, any fiscal loosening would strengthen the case for tighter monetary policy."