Successful 2021 Olympics 成功する2021年五輪
Successful 2021 Olympics and associated economic benefits => support for Suga
Successful 2021 Olympics and the associated economic benefits from commercial rights translate into public support for the Suga government ahead of Japan’s General Election in October. Optimism from a successful Olympics will give Japanese equities a strong boost. The associated capital inflow will strengthen the JPY. Since most of Japan’s electricity is produced by natural gas, increased electricity usage linked to strong industrial production will put upward pressure on Natural Gas prices. With Japan showing up at US Treasury auctions, US Treasury yield will remain stable.
Lackluster 2021 Olympics 冴えない2021年五輪
Lackluster 2021 Olympics => major fiscal hole => Suga government under pressure
A lackluster 2021 Olympics still leaves a major fiscal hole in Japan’s public finance, putting the Suga government under intense pressure ahead of Japan’s General Election in October. The continued sense of economic stagnation from a lackluster Olympics will leave Japanese equities flat. The relative lack of capital inflow or outflow will leave the JPY unchanged. There is a small upward pressure on Natural Gas prices linked to the normal summer price cycle with the need for stockpiling to host a large event. Japan will show up at US Treasury auctions but not as a prolific buyer, putting slight upward pressure on US Treasury yield.
2021 Olympics Fails 失敗した2021年五輪
Failed Olympics => new LDP leadership
Failed Olympics triggers a vote of no confidence with a new LDP leader (likely to be a more hawkish figure, such as Defense Minister Kishi, brother of former PM Abe, thus worsening regional stability) emerging ahead of Japan’s General Election in October. A failed Olympics will leave Japanese equities down. The resulting capital outflow will weaken the JPY. Natural Gas prices will remain unchanged since the earlier stockpiling ahead of a major event is not used, tampering Natural Gas demand. The resulting fiscal troubles in Japan will put large upward pressure on US Treasury yield.
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