FX Markets Update We expect the yen to reverse course before long We think the yen will strengthen against the US dollar over the next few years, as the headwinds that have driven the currency to multi-decade lows begin to unwind. 13th September 2022 · 4 mins read
Japan Economics Update Quantitative tightening not weighing on loan demand The Bank of Japan’s assets are falling for the first time since it embraced large-scale easing a decade ago, as banks are repaying emergency funds they borrowed during the pandemic. However, this is... 6th September 2022 · 2 mins read
Japan Economics Update Terms of trade shocks will hold back recovery Japan is facing its largest terms of trade shock since the second oil crisis in the early-1980s. While we don’t expect Japan to follow other advanced economies into recession, we’re slashing our 2023... 30th August 2022 · 3 mins read
Japan Economics Update Inflation will rise above 3% by year-end Soaring electricity and gas prices will help lift inflation above 3% by year-end. But with that boost unlikely to be sustained, the Bank of Japan won’t see a need to tighten monetary policy. Asia Drop... 24th August 2022 · 3 mins read
Australia & New Zealand Economics Update The implications of an escalating Taiwan crisis The extent to which neighbouring countries would be affected by an escalation of tensions between China and Taiwan would depend both on which sides they take and on the nature of restrictions imposed... 10th August 2022 · 4 mins read
Japan Economics Update Consumption to remain tepid despite fiscal transfers Real disposable household incomes will continue to be propped up until mid-2023 by fiscal transfers intended to offset the impact of virus disruption and rising inflation. But spending will continue... 27th July 2022 · 3 mins read
Japan Economics Update Widening of tolerance band not off the table yet The Bank of Japan didn’t concede any ground to bond traders today but we still think there’s a good chance that it will widen the tolerance band around its 10-year yield target. 21st July 2022 · 3 mins read
Japan Economics Update Russian gas export ban would hold back recovery If Russia decided to end all exports of natural gas to Japan, we suspect that Japan’s GDP would fall by around 0.5%. However, the hit could be larger as there is now less scope to reduce energy usage... 4th July 2022 · 3 mins read
Japan Economics Update A reprieve for Yield Curve Control The Bank of Japan gave no ground at all to bond traders today as it left all its major policy settings unchanged. Governor Kuroda was resolute in claiming that Yield Curve Control has no limits in his... 17th June 2022 · 3 mins read
Global Markets Update BoJ to raise ceiling on 10-year yields The weakening in the yen to a 24-year low and a crack in the Bank of Japan’s ceiling on 10-year yields today is putting significant pressure on policymakers to respond. FX intervention is a... 13th June 2022 · 5 mins read
Japan Economics Update Are the demographic headwinds strengthening? A falling fertility rate and declining employment among retirement age workers pose downside risks to our long-term forecasts for Japan’s labour force and GDP growth. However, with the female... 7th June 2022 · 4 mins read
Japan Economics Update Weaker yen won’t provide a big boost to net exports With Japan’s terms of trade set to improve only modestly and interest rates differentials moving further against the yen, we expect the exchange rate to fall to 140 against the dollar by year-end. But... 19th May 2022 · 2 mins read
Japan Economics Update Large pot of pandemic savings to collect dust The hit to household incomes from higher inflation will be much smaller in Japan than elsewhere and consumers have plenty of pandemic forced savings to tap into to sustain spending. But we nonetheless... 11th May 2022 · 4 mins read
Japan Economics Update Weaker yen will help lift underlying inflation to 2% The pass-through of higher import costs resulting from the weaker yen and soaring energy prices will lift underlying inflation close to the BoJ’s 2% target by the end of the year. However, with wage... 4th May 2022 · 5 mins read
Japan Economics Update BoJ may yet widen its tolerance band The Bank of Japan resisted the temptation to widen its tolerance band for 10-year JGB yields today, but it did outline that it will from now on conduct unlimited fixed rate auctions every business day... 28th April 2022 · 3 mins read
Japan Economics Update BoJ to widen 10-year yield tolerance band further With US Treasury yields set to keep rising over the coming year, it will become even more difficult for the Bank of Japan to defend its target for 10-year JGB yields. While we don’t expect the Bank to... 26th April 2022 · 4 mins read
