Japan Election Risk in Focus

JGBs and JPY getting jittery.

Sunday (20th July) sees the upper house election take place in Japan, with a mid-term mood check for Prime Minister Ishiba’s minority government. A Reuters analysis estimates it’s a 50:50 chance that the LDP–Komeito coalition will lose its majority.

If they do, the opposition parties will push for higher government spending, lower taxes, and preemptive pressure on the BoJ to push back rate hikes, which will put pressure on JGBs and the Yen. This is already starting to take place as investors hedge some risk.

We run through our election preview, current market moves and trade ideas to play either side.