The general rule is that bad news is good news for yen.

Japanese money is spread around the world in search of higher-yielding assets but when trouble strikes, it returns home. It’s become a knee-jerk reaction in markets to buy the yen and in some ways that’s a self-fulfilling prophesy.

But today’s GDP data and the rebound in USD/JPY shows the correlation is beginning to show cracks.

Everyone knows that Japan is in trouble. It’s a demographic time bomb and a debt nuclear bomb that will be compounded by the inevitable delay/cancellation of the planned sales tax hike.

Japan debt to GDP

Japan debt to GDP

Abe is trying to leverage his popularity into a fresh mandate before the wheels come off. Jiji Press said Abe would probably announce the snap election at a news conference on Tuesday.

This could be the start of a cycle where money begins to flow out of Japan non-stop, despite the risk environment. That’s the kind of thing that starts USD/JPY on the path to 200.