The issue revolves around Japan's immense debt load. The country's current percentage of debt to gross domestic product stands at around 211%. Sales tax hikes were planned for 2014 in order to reform fiscal policy and cut into the astounding level of debt.
But in recent weeks, reports have surfaced that Abe is considering scrapping the tax hikes in an effort to keep consumer spending and GDP on the rise. Japan's most recent retail sales underperformed expectations, further evidence consumers may be vulnerable to tax hikes.
All of this uncertainty has pushed domestic equities lower and the yen higher.
The risk is that the Abe's policies will never come to fruition. Bondholders believed their investments would be kept safe through sweeping monetary and fiscal reforms. With the fiscal side now in question, instability could cripple investor sentiment and push riskier assets lower.
The inverse trade is a stronger yen. The chart below is of CurrencyShares Japanese Yen Trust over CurrencyShares Swiss Franc Trust . Both the yen and franc are bought during times of market duress. The yen, however, is outperforming due to the additional monetary policy questions.
The market questions whether Abe will come through on his promises and whether his policies will be effective.
At the time of publication the author had no position in any of the stocks mentioned.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.