Here’s some counterintuitive thinking for you. Societe Generale not only believes that Japan is on course for a v-shaped recovery, but they also say Japan is “too rich to be bankrupt”:
“ECONOMICS: Data to confirm Japan on track for a V-shaped recovery. May retail sales (Tuesday), Industrial production (Wednesday) and BoJ’s Tankan survey (Friday) should confirm Japan is on track for a V-shaped recovery. However, domestic political stalemate hampering recovery efforts.
RATES: Still too rich to be bankrupt. Release of Japan’s Flow of Funds statistics by the BoJ highlights how rich Japan remains and how difficult it is for it to go “bankrupt” in a fiscal crisis. In spite of this wealth, we argue it is difficult for 10y JGBs to rally much from here.”
Source: SG Research