Core Viewpoint - Japan's ruling coalition faced a historic defeat in the recent House of Councillors election, marking the first time since the Liberal Democratic Party's (LDP) establishment in 1955 that it lost a majority in both houses, leading to increased political fragmentation and uncertainty in the economy [1][2] Economic Impact - Rising inflation and the introduction of foreign immigrants have led to public discontent against the LDP, exacerbated by the impact of the Russia-Ukraine conflict, which has caused a reversal of Japan's long-standing deflation and uncontrolled rice prices [1][2] - The Bank of Japan's benchmark interest rate remains at 0.5%, contributing to yen depreciation and import-driven inflation, while the influx of foreign tourists and investors has intensified local resentment towards foreigners [1][2] Political Dynamics - The political landscape is shifting towards the right, with younger voters supporting right-wing parties advocating for "Japan First" policies, which include rejecting immigration and proposing tax cuts and subsidies to alleviate living costs [1][3] - Prime Minister Kishida's weakened political foundation may hinder substantial concessions in U.S.-Japan trade negotiations, potentially leading to a stalemate in both the political arena and trade discussions [2][3] Fiscal Challenges - The call for tax reductions, particularly on consumption tax, is gaining traction, with 52% of the public supporting such measures, despite concerns that this could worsen Japan's fiscal situation and lead to increased long-term interest rates [3][4] - Japan's national debt stands at 250% of GDP, the highest among developed nations, necessitating low interest rates to manage government interest costs while stimulating exports [2][3] Market Reactions - Political uncertainty is expected to negatively impact yen-denominated assets, potentially driving international capital away from the Japanese bond market, which could trigger broader risks in U.S.-Japan capital markets [4]

Core Insights - The June performance index for China's catering industry is reported at 49.98, indicating a slight increase of 0.56, but still reflects a prolonged period of micro-contraction over nearly 11 months [1] - The industry is currently experiencing a phase of overall recovery intertwined with structural adjustments, as indicated by the performance index trends [1] Industry Performance Metrics - The profitability index for catering establishments in June is 46.16, while the customer traffic index is 49.23, showing month-on-month increases of 1.56 and 5.78 respectively [1] - However, the sales revenue index stands at 43.30 and the employment scale index at 44.65, both reflecting month-on-month declines of 2.01 and 0.44 respectively, suggesting that while customer visits have increased, average spending has decreased due to intensified market competition and changing consumer habits [1] - The expectation index for the catering industry is at 54.12, slightly down by 0.10 from the previous month, indicating a generally positive outlook for the upcoming month, with all indicators above neutral levels [1] Sub-sector Performance - Among various business formats, Chinese fast food, casual dining, snacks, and beverage sectors have performance indices above neutral levels, with significant increases in their current indices: 7.82 for Chinese fast food, 14.08 for casual dining, and 8.10 for snacks [2] - Despite the ongoing micro-contraction in the catering industry, both the investment expectation index and quarterly expectation index have remained above neutral levels for 12 consecutive months, reflecting optimism among businesses regarding the industry's future prospects due to policy support and market recovery trends [2]