If the current ruling party loses its majority, the country’s waters could become uncharted at a critical time.

Investors in Japanese government bonds are bracing for a potential power shift in upper house elections this weekend that could strain the country's already frail finances, with long-dated yields soaring to all-time highs as the vote nears.

Japan’s bond market is facing a potential Liz Truss moment as the risk of a ruling coalition defeat in Sunday’s election fuels concerns over fiscal policy, according to SMBC Nikko Securities Inc.