JAPAN: Postal Reform Bill: DEFEATED: Immediate Moves
The Postal Reform Bill was soundly defeated in the Upper House, 125 to 108.
The immediate fallout was dissolution of the Lower House, with elections needing to be held in the next 40 days. Elections are held on Sundays, so that leaves September 11 as the likely date for next elections.
Market Plays:
Weaker Yen, Upward Pressure on Yields, Equities stable.
-With this situation there is almost no way the BoJ will look to move it's reserver targets further.
If the LDP wins the lower house:
Yield Curve will flatten back out, Equities will remain stable, Yen will recover (though long term 115 is likely equilibrium).
If the DJP wins the lower house:
Bad news across the board: Yield curve will push up further, equities will be volatile as economic/fiscal environment becomes unsure, Yen will push 115 sooner.
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Commentary: The markets punished Europe too much for the failed constitutional vote and Japan not enough for the failed Postal Reform. Euro looks attractive, on Euro/Dollar plays into Dollar/Yen payoff.
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Good Background:
<1> <2>
The immediate fallout was dissolution of the Lower House, with elections needing to be held in the next 40 days. Elections are held on Sundays, so that leaves September 11 as the likely date for next elections.
Market Plays:
Weaker Yen, Upward Pressure on Yields, Equities stable.
-With this situation there is almost no way the BoJ will look to move it's reserver targets further.
If the LDP wins the lower house:
Yield Curve will flatten back out, Equities will remain stable, Yen will recover (though long term 115 is likely equilibrium).
If the DJP wins the lower house:
Bad news across the board: Yield curve will push up further, equities will be volatile as economic/fiscal environment becomes unsure, Yen will push 115 sooner.
------------
Commentary: The markets punished Europe too much for the failed constitutional vote and Japan not enough for the failed Postal Reform. Euro looks attractive, on Euro/Dollar plays into Dollar/Yen payoff.
------------
Good Background:
<1> <2>
posted by howa at
8/08/2005
